A report from the Aspen Times in Colorado. “I met a colleague of mine at an Aspen coffee shop earlier this week. We talked about the recent shift from the non-stop activity for the second summer in a row, to what has been a noticeable reduction in sales volume related to available listings. I nearly choked on my cappuccino when my coffee mate asked me if I had ever experienced this kind of stagnation before? Surely she was joking before remembering she was not a broker when the Great Recession hit and the music stopped playing; not for a few months but for years on end.”
“And then there’s the very real phenomena of buyers remorse. We saw many buyers who had visited or were familiar with our valley escape from the cities and buy homes and land here. But I’m guessing about 1 in 10 of those folks came here in a bit of a panic, following the herd and not knowing what the mountain lifestyle was all about and are now missing the bright lights, the ballpark and the opera. And you don’t need snow tires in LA.”
The Stamford Advocate in Connecticut. “‘Before COVID started, I think we were in a pretty normalized market,’ said Daniel Thomas, a real estate agent who works in Bridgeport and Stratford. ‘Things were on the market for 30 days. Prices were right on average. Once COVID hit … houses that we didn’t think would sell at the prices they were listed at, they started moving. It’s still a seller’s market, but I think it’s shifting toward a little more advantageous for the buyer. Things aren’t selling as quickly as they used to.’”
“Jeff Viens, a Willimantic landlord who owns about 55 apartments in Windham, including some in Willimantic, said he lost about $40,000 in income in the first nine months of this year. He’s increasing rents in some cases and trying to get tenants signed up for UniteCT in others. He hasn’t had much luck, he said. Of seven tenants to apply, only one has been approved for the program. ‘It can really hurt you financially,’ he said of the losses. ‘How are you going to recoup that?’”
From KOMO TV in Washington. “The state is on the brink of a major shift for landlords and tenants as the eviction moratorium is set to expire. Gov. Jay Inslee said he won’t extend it past Sunday. Landlords said they have also struggled to make their mortgages. The eviction ban put many in a bind, especially when tenants had the ability to pay but refused. ‘Yes I think it’s been tough because my husband has a rental and sometimes it’s been hard trying to evict people,’ said Maureen Mwaniki.”
The Miami Herald. “Over the past 18 months, South Florida’s red-hot real estate market has been celebrated and well-documented in these pages and other media outlets, and for good reason. But real estate markets are complicated ecosystems and dramatic growth in one area will often lead to weakness in another. With so many homeowners now faced with either foreclosure and/or the resumption of mortgage payments, it is reasonable to assume that a very large percentage will opt to sell in this sizzling market, creating more buying opportunities down the road.”
“Here in town, I have already seen an increase in ‘short sales’ resulting from these changes and have even placed offers on some for my clients. (Readers may recall the popularity of short sales in the aftermath of the Great Recession of 2008, whereby thousands of homeowners found themselves ‘underwater,’ with their property values lower than their mortgage loan amounts. Under these transactions, lenders would accept the net proceeds of sales at closing, satisfying a greater amount of the mortgage debt.)”
“In recent weeks, I have had a flurry of properties listed by my longtime and older clients who, for a variety of reasons, are compelled to enter the market at this stage. This is a common trend when hot cycles are perceived to have cooled off a bit. Some simply want to get in the game while they can demand higher pricing, while others are ready to downsize through major lifestyle or life cycle changes.”
“My own neighborhood of south Coral Gables offers a snapshot of this trend. A single-family rental property (which once demanded a lease of $8,500/month) hit the market at $2.75 million and went to contact after a reduction to $2.45 million. I would not expect any of these factors to individually have a major impact on the market of available homes, which will only relax appreciably once prices stabilize for a long and consistent duration. But taken together, they could put a dent in the steel curtain of inventory faced by South Florida buyers this year.”
From Bankrate. “The overseer of mortgage giants Fannie Mae and Freddie Mac will begin accepting more ‘desktop appraisals’ in early 2022. The pandemic made lenders more comfortable with the idea of appraisers working remotely. During the peak of the contagion, some states forbade in-person appraisals. As a workaround, appraisers sometimes asked homeowners to lead property tours by Zoom or FaceTime, and even to submit measurements of their homes. Meanwhile, steadily rising home values have taken much of the risk out of lending, at least for now.”
From Mortgage News Daily. “For anyone following interest rates very closely in 2013, the taper tantrum is not easily forgotten. It describes the bond market’s knee-jerk response to the realization that the Federal Reserve would be winding down its bond purchase program. With the Fed almost certain to make a similar announcement next Wednesday, should we be scared yet again?”
“You may also be surprised to learn that the Fed didn’t actually announce tapering until December 2013! In June, they merely said tapering was likely by the end of the year. Here’s another surprise: 2021’s Version of June 2013 Already Happened. Remember September 22nd? Rates had been flat, low, and relatively drama free for months when Fed Chair Powell all but promised to taper on November 3rd during the Sep 22 press conference. Even without the notice, we knew tapering was coming eventually. In fact, markets were already starting to prepare for it by the end of 2020, thus making for a sort of slow-motion taper tantrum.”
From CTV News. “Canadians looking to buy a home can expect mortgage rates to soon be on the rise, experts say. ‘The variable rates will go up quite quickly, they could even go up in anticipation of the bank action,’ said Don Drummond, former chief economist for TD Bank. ‘We should want [interest rates] to go up. This is causing a lot of imbalances, it’s putting the entire world in massive quantities of debt and that’s going to come back to hound us if we don’t put an end to that. Unfortunately, people won’t see that because they’ve lived through the lowest rates in history. There’s a generation of young people who are hooked on super low mortgage rates and they have come to believe that that is a norm. But that is not the norm.’”
From Business Insider. “The Reserve Bank of Australia (RBA) has acknowledged ultra-low interest rates have contributed to record high housing prices, but still maintains that jobs would be endangered if rates are lifted too soon. Appearing before the Senate Economics Legislation Committee on Thursday, RBA deputy governor Guy Debelle faced direct questioning from Greens Senator Nick McKim over the reserve’s decision to hold the cash rate at just 0.10%.”
“McKim asked if the RBA planned to push for legislation which would allow it to channel funds into ‘productive’ areas of the economy, instead of watching money pour into the housing market. ‘We are not intending at the moment to direct the government to change our Act, no,’ Debelle said.”
From Yicia Global on China. “On October 23, the Standing Committee of the National People’s Congress authorized the State Council to undertake property tax pilot projects. In the piloted areas, both commercial and residential properties are to be taxed while rural homes are to be excluded. The Ministry of Finance and the State Taxation Administration will draft the measures for the pilot projects, which are to last five years.”
“Many people buy apartments as investments. They often leave these investment properties empty, not bothering to rent them out. The absence of a recurrent property tax makes this an affordable option. In the West, the existence of a large stock of empty apartments typically indicates a cyclical downturn in the housing market. This sort of overbuilding could pose a financial stability risk. In China, the empty apartments are a structural phenomenon.”
“Since Chinese housing is so expensive, relative to income, imposing a property tax could be destabilizing for many families. Family incomes would be especially at risk in First Tier cities – like Beijing, Shanghai and Shenzhen – where it takes more than 20 years of family income to buy a home. For example, if I were to pay 0.8 percent of the value of my modest Pudong apartment in tax, it would eat up more than a fifth of my gross income!”