A report from WGHP on North Carolina. “Investment firms are scooping up more and more homes for sale in the Triad. Diane Spivack, a resident of Brightwood Farm, started asking herself who her neighbors were when she saw some people on her street not maintaining their homes or abiding by the HOA code. She quickly discovered more than 100 of the over 600 homes in her neighborhood aren’t owned by a person or family but by a handful of hedge funds and investment groups. The homes are then rented to single families.”
“‘I rallied on Nextdoor to see how many people knew about this, and a lot of them didn’t know. This is hurting our home values,’ Spivack said. ‘I just want our investment to be safe.’ ‘What’s interesting now is they’re paying over market value, and they’re actually increasing value in the marketplace, so there’s some good to these things happening, but there’s some bad to these things as well,’ said Brad Barbour the owner of Hill Barbour Realty. ‘Let’s say an investor owns more than 10% of a neighborhood. That’s a problem for a lending institution because if something happened to that investor, if they shut their doors for any reason, that changes the makeup of that neighborhood,’ Barbour said.”
From WOWT in Nebraska. “The leader of an Omaha landlord organization says more and more landlords are getting out of the home rental business. Rick McDonald is a landlord and he says lately landlords have been taking it on the chin, and the punching started when the pandemic hit. The federal funds were slow to arrive and landlords have more than one mortgage to pay. ‘So it took an effort by a number of different parties to try and figure out how you’re going to keep from losing your property.’”
“McDonald says things seem to be piling up, working against landlords, now they have to deal with another year or rising valuations and many landlords are getting out of the game. ‘I hear more and more I think I’ll just get out of it, this just isn’t worth it anymore.’”
From NOLA in Louisiana. “It seemed like a profitable fit: two big players in the New Orleans housing game, teaming to soak up high demand for tourist rentals. But the deal that low income landlord Joshua Brunoand short-term rental giant Sonder USA struck in late 2017 soon devolved into a dispute that is headed for a federal trial Monday. Bruno’s attorneys allege that Sonder breached the contract and violated Louisiana’s Unfair Trade Practices Act, by manufacturing cause to break the leases. The real reason, Bruno argues, was Sonder’s ‘inability to lease up the units and their failure to procure the appropriate and required short-term rental permits from the city of New Orleans.’”
The Real Deal on Florida. “A unit owner at Paraiso Bayviews is accusing a mortgage company owned by a semi-celebrity Miami broker and Miami-based Devstar Group of attempting to force her into paying $100,000 in illegal late fees for falling behind on her payments, according to a recently filed lawsuit. Paraiso Ocean LLC, a company owned by Veronica Aguilar Garrido, is suing International Mortgage Capital Fund I in Miami-Dade Circuit Court for breach of contract, fraud and deceptive practices. It’s an attempt to stop the foreclosure sale of unit 307 in the 44-story tower at 501 Northeast 31st Street. Garrido’s entity bought the studio for $560,900 in 2018, records show.”
“Internoscia told The Real Deal that Garrido’s entity’s lawsuit is completely inaccurate. ‘When people default on a mortgage, they hire attorneys to come up with every possible excuse,’ Internoscia said. ‘The foreclosure was filed way before Covid even started. We tried to resolve this matter six or seven different times.’”
From Socket Site in California. “As we outlined at the end of January: Purchased for $1.185 million in December of 2015, the ‘modern, stylish, tri-level loft’ #14 at 175 Russ Street, ‘in the heart of SOMA,’ resold for $1.165 million in April of 2019, which was down 1.7 percent on an apples-to-apples basis but ‘17.1 percent over asking!’ according to all industry stats and aggregate reports. And having returned to the market listed for $1.195 million this past June, reduced to $1.189 million in August and then to $1.165 million in November, a sale at which would be considered to be ‘at asking,’ the ‘luxurious tri-level loft’ is now in contract.”
“The sale of 175 Russ Street #14 has now closed escrow with a contract price of $1.1 million, down 5.6 percent from the second quarter of 2019 and 7.2 percent below its price at the end of 2015 on an apples-to-apples-to-apples basis.”
From Tech Crunch. “Online mortgage lender Better.com is poised to lay off roughly 50% of its staff of about 8,000 this week, according to sources familiar with internal happenings at the company. With the interest market changing dramatically, Better.com had to transition to be more of a ‘purchase’ business, or one that helped people with new loans. The hit to its reputation has apparently made it more challenging for Better.com to attract new customers.”
“Macroeconomic factors have also had a negative impact on the company’s business. Higher interest rates, which led to a large drop in demand for refinancings, led to the original layoffs in December. Interest rates are only continuing to rise. Rising inflation is not helping matters. No word yet on when or if the company will move forward with its SPAC, but it would be surprising if it did, considering the state of Better.com’s business. Last year, we reported that the SPAC would value Better.com at $6.9 billion. It’s likely safe to say that its valuation is dramatically lower today.”
The Globe and Mail. “The day after the Bank of Canada raised its policy interest rate off its pandemic-emergency floor, the central bank’s Governor, Tiff Macklem, faced down worried questions about the strains rising borrowing costs were about to place on the backs of Canadians. ‘The economy can handle higher interest rates,’ he told the House of Commons finance committee. ‘The economy can handle higher interest rates,’ he told reporters in a news conference. ‘The economy can handle it,’ he said in a speech to the CFA Society of Toronto.”
“Mr. Macklem’s confidence is underpinned by the bank’s faith that the economy can pivot away from the bloated housing sector. It’s no given. The bank has tied its hopes to such a growth rotation before, and has been disappointed. That’s remarkably similar to the script embraced by Mr. Macklem’s predecessor, Stephen Poloz, as he attempted to guide the economy to a full recovery and return interest rates to normal levels during the lost decade after the 2008-2009 global financial crisis. Almost from the day Mr. Poloz started as governor in 2013, he talked optimistically about the economy pivoting from consumer-led growth fuelled by ultra-low-rate monetary policy and a soaring housing market, to a more ‘self-sustaining’ phase.”
“If those other sources of growth stall, rising rates will pose an oversized burden on an economy that has relied heavily on debt-fuelled housing and consumer demand to keep it afloat. ‘The fact of the matter is that we have a tremendously leveraged economy on our hands. It’s much more interest-rate sensitive than it has ever been in the past,’ economist David Rosenberg, head of Toronto-based Rosenberg Research, told BNN Bloomberg. ‘That’s going to thwart the extent to which central banks can raise interest rates without crushing the economy.’”
The Sydney Morning Herald in Australia. “CoreLogic research director Tim Lawless says: ‘With rising global uncertainty and the potential for weaker consumer sentiment amidst tighter monetary policy settings, the downside risk for housing markets has become more pronounced.’ Martin North, founder of Digital Finance Analytics, says: ‘Prices are likely to ease back from here and so the imperative [for first-home buyers] to catch the runaway train is, in my view, old news.’”
“The forces that powered the red-hot housing market over the past two years are losing momentum, says Steve Mickenbecker, group executive of financial services at Canstar. Westpac this week lifted its fixed-interest mortgage rates for the third time this year, following similar moves by other major banks. ‘That shows just how quickly interest rates rise when they start moving off the floor,’ Mickenbecker says. ‘Borrowers have to prepare for multiple [interest-rate] increases and a big leap in repayments.’”
From Newshub New Zealand. “A new real estate survey has revealed a record number of agents are seeing a decline in house prices in their location. Out of the 468 respondents, a record net 44 percent of agents said that prices are declining in their location. Just 6 percent reported that prices are rising, 50 percent said they are falling, and 45 percent said they are not changing. The survey shows that agents feel prices are falling in all locations except Queenstown.”
“The survey respondents also revealed that fear of missing out – or FOMO – is no more and just 7 percent said they saw buyers displaying this. No agents reported seeing any FOMO in Hawke’s Bay, Manawatu-Wanganui, Wellington, and Dunedin. A gross 18 percent in Queenstown, however, reported some FOMO, the survey says. ‘Widespread reports of weakening sales, falling prices, and inability to get credit likely account for buyers no longer feeling a visceral need to buy as soon as possible,’ the report says.”
From Reuters. “Chinese high-yield dollar debt spreads have hit their widest since the peak of property developer China Evergrande Group’s liquidity crisis last November. Clarence Tam, fixed income portfolio manager at Avenue Asset Management said developers’ margins remain under heavy pressure from falling sales and government curbs, despite regional policy loosening. Poor fundamentals prompting rating downgrades would raise the difficulty of refinancing, leading to tighter liquidity and worse fundamentals, he said. ‘We think the downward spiral will continue … and spread to some ex-BB names.’”