A report from the Missourian. “Realtors and lenders in Franklin County said demand for housing remains strong even with inflated costs. The price of houses have gone up dramatically in the last few years. Cory Davis with RE/MAX Gold in Washington said for several years a 10 percent annual increase in home prices has been expected, more than double the average annual uptick (4.6 percent) posted since 1989. Within a few years the local number has been an annual increase of 15-20 percent. ‘I’m just going to say that something has to happen, which is the interest rate maybe,’ said Cindy Haas of Alternative Realtors in Washington. ‘Maybe that’s going to maybe bring some of the housing prices down where more people can afford them.’”
From Fortune. “Gary Friedman, CEO of RH, formerly known as restoration hardware, went a bit off script when asked about the current macroeconomic environment. He made comparisons between today’s economy and the Great Recession, warned about the threat of rising inflation, and even referenced a scene involving the now-defunct investment bank Bear Stearns in the subprime mortgage crisis movie The Big Short.The CEO also questioned whether the housing market’s current state was sustainable. ‘You’ve got housing prices at all-time highs. I mean, is it sustainable? I don’t know for how long the math doesn’t make sense on kind of what’s happening in the housing sector and other places.’”
“Time and again, Friedman criticized Fed officials for their miscalculations on rising consumer prices over the past year. ‘You’ve got inflation like I’ve never seen. Now I was telling people, when Yellen said, we’re going back to 2%, we were just signing our new freight contracts, ocean freight contracts. I just, I wonder if anybody at the Fed has picked up the phone and called a business person and said, hi, what do you think is happening with inflation? How are ocean rates? How is this? How is that? I mean I think — I don’t think anybody really understands what’s coming from an inflation point of view, because either businesses are going to make a lot less money or they’re going to raise their prices…I think it’s going to outrun the consumer.’”
From Bloomberg. “Developer China Oceanwide Holdings Ltd. is trying to generate cash by selling properties in New York and Hawaii, as it works to revive a massive Los Angeles project that’s been frozen in mid-construction for three years. The Beijing-based company plans to sell assets that won’t generate immediate revenue — or haven’t been seized by creditors — ‘and reserve resources to develop the LA project,’ according to an annual filing in Hong Kong. Oceanwide has spent about $3.5 billion on U.S. real estate developments.”
“It recorded a $214.9 million impairment on a site at 80 South St. in Lower Manhattan in which it has invested $410 million. The property was put up for sale in October. Oceanwide reported impairments totaling $90.5 million in 2021 on development sites in Oahu, Hawaii, in which it had invested $653.3 million. It reached deals to sell a parcel for $92.9 million this month and a separate property for $23.3 million in December, according to the filing. Oceanwide lost a San Francisco project, in which it invested $1.3 billion, last year after it was seized by lenders.”
The Los Angeles Times in California. “The nonprofit advocacy group had planned three events at a South Los Angeles office to help unhoused people obtain emergency shelter. But then an unofficial social media post erroneously promised that those who showed up would get rare vouchers for permanent, subsidized housing. The housing authority was there at the behest of Rep. Maxine Waters (D-Los Angeles), who delivered emotionally charged remarks to the crowd Friday, at one point using an expletive to defend her efforts to relieve the city’s housing and homelessness crisis.”
“Waters told the gathering of mostly homeless people Friday that ‘you cannot get Section 8 vouchers here.’ And later, ‘I want everybody to go home.’ The response was fast and angry, a voice from the crowd yelling, ‘We don’t got no home, that’s why we’re here. What home we gonna go to?’”
“Less than half a minute later, the congresswoman responded to a question from the founder of Kingdom Warriors Foundation, a local housing advocacy nonprofit. Jabbing her finger into the air, Waters said, ‘Excuse me, there’s nobody in Washington who works for their people any f— harder than I do. I don’t want to hear this. No, no, no.’ Waters then answered a plea that she work with the community to address the housing crisis: ‘That’s what I do every day. The money that you got thus far came from me in Washington, D.C.’”
The Globe and Mail in Canada. “The cooling in some parts of Ontario’s real estate market is restraining buyers and flummoxing sellers as both sides try to figure out what comes next. Benjamin Reitzes, Bank of Montreal’s macro-economic strategist for Canada, cautions that rising interest rates will continue to dampen the enthusiasm around housing. Mr. Reitzes says one reason for concern is that the market has seen a surge in investor activity driven by expectations of higher prices in the future. ‘The potential for price declines is higher this cycle as many cities have seen prices go parabolic in recent months,’ he says.”
“Against that backdrop, some buyers appear more hesitant to jump into overheated bidding contests. In Durham region, east of Toronto, Shawn Lackie is seeing showings subside and offers dwindle after the average sale price hit $1.228-million and the average detached house traded for $1.379-million in February. ‘That’s just insane,’ the agent with Coldwell Banker R.M.R. Real Estate says.”
“In recent weeks, Mr. Lackie says, homeowners who could have expected 10 or 12 offers at the start of the year now might receive two or three. Helping sellers to understand the new reality is challenging, Mr. Lackie says. Prices are holding firm for now but the outlandish bids that sparked panic in some buyers at the start of the year are less common. Mr. Lackie points to one house he recently listed with an asking price of $579,000. A couple of offers came in near the asking price, but one buyer stood out with a bid of $705,000.”
“Against Mr. Lackie’s advice, the seller wanted to hold out for $850,000. The property did not sell and is now off the market, he says. The veteran agent says he’s reminded of the spring of 2017 when a burst of buyer mania preceded a bout of market malaise. In April, 2017, the Ontario provincial government introduced a foreign buyer’s tax and other measures intended to cool the market. A few months later, listings swelled.”
“‘These buyers who were thinking they would never get a house had an extra 40 or 50 to choose from. Then they realized they were holding the hammer.’ In the current market, Mr. Lackie is once again seeing homeowners who are contemplating selling sit on the fence as they wait for the market to peak. ‘A lot of sellers are saying, ‘Hopefully I’ll be able to get in right at the very end.’”
The Daily Telegraph in Australia. “When the call for an opening bid at a Sydney auction is met with an awkward silence from bidders – you know something is awry. Yet that happened more than once during last Saturday’s auction round. The latest figures from CoreLogic suggest that as more properties enter the market, more and more are passing in at auction. Some say their vendors’ reserves are a little on the high side. Others say they don’t know how many bidders will even turn up.”
“Even in the billion dollar suburb of Castle Hill, things aren’t going as well as what some vendors had hoped for. On Saturday, a renovated family home with an outdoor gym that would have been a hot ticket item last year failed to even get an opening bid. The auctioneer wouldn’t accept anything less than $1.7m to start. The auction passed in, no bids received. The selling agent declined to comment. And after a year of more than 20 per cent price growth in the Harbour City, it seems being realistic is the best strategy moving forward.”
The South China Morning Post. “Amid a surge of Omicron infections sweeping China, Tang Lin has watched business dry up at her small noodle soup restaurant in Nanning, the capital of Guangxi province in southern China. Though the city has reported only three cases of the highly transmissible coronavirus variant since March 1, stringent pandemic controls have hit small businesses hard. Internet cafes, karaoke parlours and bars have been forced to suspend operations, while some eateries in her neighbourhood are making less than 1,000 yuan (US$157) a day and have begun laying off staff, Tang said.”
“‘More small business owners are trying to sell their properties in order to raise cash to pay for rent and labour, but it is hard to find buyers as the property market is sluggish as well,’ said Tang. ‘We don’t have income, so what’s the point of a tax cut?’”
“In Guangzhou, merchants at the city’s garment wholesale market have been on strike since last Tuesday, calling for a reduction in rent or an exemption, said Wang Xiu, an industry insider. ‘The upstream business is stranded due to disruption to demand and production by the nationwide Covid-led restrictions. Downstream, garment processing factories across Guangdong have to close one after another. What would make things more risky, small business owners or employees would have face growing pressure to repay mortgages either in Guangzhou or in their hometown cities.’”
From CNN Business. “China’s huge tech sector may be staring at its worst jobs crisis ever. According to Lagou, one of China’s largest tech recruitment websites, 2.76 million tech employees marked their status on the platform as ‘left the job’ in March — 260,000 more than in December and about 60,000 more than the same month last year. Most of the job losses were concentrated in major cities such as Beijing, Shenzhen, Guangzhou, and Shanghai, Lagou added.”
“Other industries have also suffered in recent months. Research by Tongdao Liepin, another major recruitment website, found that about 57% of Chinese companies surveyed in January laid off between 10% and 50% of their workforce last year. The job losses were concentrated in education, real estate, and internet-related industries, the survey added.”
“JD.com is also planning to lay off between 10% and 15% of its workforce at its group-buying Jingxi unit, a person familiar with the matter told CNN Business. According to some social media posts, JD.com dismissed some workers earlier this week with notes that read: ‘Happy graduation! Congratulations for having graduated from JD.com! Thank you for the companionship.’”