A report from the Real Deal. “A digital lending platform is laying off 200 employees as a historic surge in mortgage rates tamps down applications. Blend Labs is letting go of roughly 10 percent of its staff to shed $34.5 million in annual payroll. Layoffs have swept the industry in recent months, most visibly at Better.com. Movement Mortgage in April laid off around 170 employees, primarily affecting employees in the processing, underwriting and closing departments in the South Carolina-based company. Interactive Mortgage and Freedom Mortgage had previously reduced headcount.”
“Fannie Mae analysts said this week that they expect lenders to refinance $889 billion in mortgages this year but only $558 billion next year, an 80 percent drop from the $2.8 trillion in 2020.”
From Bloomberg. “Negative yields have vanished from the world’s corporate bond market as investors brace for monetary tightening. It’s a dramatic turnaround from August, when more than $1.5 trillion of debt, most of it in Europe, came with a sub-zero yield. It marks the end of an era fueled by easy money and extraordinary central-bank policy meant to hold down borrowing costs and stimulate inflation. Now it’s all going in reverse. Bond yields are soaring around the world and investors are worried that inflation is getting out of control.”
“Investors in Asian dollar debt have lost $155 billion over the past 9 months, pummeled by weakness in China in addition to the global selloff in fixed income seen around the world as interest rates rise. U.S. junk bond investors saddled with losses so far this year can take heart from new Wall Street estimates for a big decline in U.S. offerings.”
The Associated Press. “The average weekly rate on the benchmark 30-year mortgage has risen swiftly since the first week of this year, when it stood at 3.2%. Last week it climbed to 5% for the first time in more than a decade. This week it rose to 5.11%, a 12-year high, according to mortgage buyer Freddie Mac. A year ago, it was 2.97%. ‘That was a tailwind in the housing market that generally drove turnover,’ said Mark Fleming, chief economist at First American. ‘That tailwind now turns into a headwind.’”
The Los Angeles Times in California. “For almost 150 years, it’s been Angelenos’ universal Topic A. Buying it, selling it, looking at it, yearning over it — a pastime, a hobby, and a preoccupation, and everyone has a story to tell. It’s a genre in reality TV. Today, what was once a working family’s dream home, like the two-bedroom houses in the planned postwar city of Lakewood, is now a ‘starter’ house, priced at a lunatic $700,000 for under 900 square feet.”
“Now, here is some guilt-free schadenfreude for you, instances when high-flyers have taken an Icarus nosedive.”
The Toronto Star in Canada. “Daniel Foch, a Markham-based realtor, has noticed a recent change in the buying behaviour of his clients: most used to bid on homes at a feverish pace — eager to get in the market while interest rates were low — but now they’re taking a ‘wait and see’ approach, carefully calculating the right time to buy. Two months ago, the broker at Foch Family Real Estate saw bidding wars with as many as 20 potential buyers. Today, that number has, on occasion, dropped to as little as two offers.”
“‘There’s far less urgency than there was a few months ago,’ Foch said. ‘Some buyers are being rewarded for their patience now.’”
The Guernsey Press. “I’m a very simple man with only a limited amount of formal education, having taken my last exam at the age of 17 in 1972. Which probably explains why I can’t get my head around our housing crisis. However, in an attempt to get to the bottom of it I have channelled my inner Digard and, rather than just making stuff up as usual, I have actually done a little bit of research. Over the last decade our population has grown by about 700 souls. Well there’s your answer then. No wonder there aren’t enough homes. Sorry folks, very short column today but issue already covered.”
“Hang on, I wonder if the number of homes has increased at all? Well knock me down with a feather, it has gone up by about 1,400. I know my maths is a bit rusty but I make that about one additional domestic property unit for every half a new person. On the face of it, we seem to be building twice as many new houses as we need, even with a massive margin for error. And though I don’t get out much these days, with the aid of medical intervention and big pharma I have managed four car rides this year so far. Double last year’s record. And blow me down, there are new builds everywhere.”
From Stuff New Zealand. “First home buyers who bought into a $37 million affordable housing development in west Auckland might think they are watching their houses being built, but they have actually been watching a completely different project in motion. One buyer, who did not want to be named, because he is concerned it could affect his future relations with Reed Myers, says he is on antidepressants, and has been experiencing sleepless nights because of the ordeal.”
“But he does believe the company’s assurances that the development will be built. ‘Obviously I am angry, but what can I do? … I need my development, I need my house to live in.’”
“However, property investors Eddie Simpson and Annie Zaloum, who own the land at Triangle Rd, say the Reed Myers development there is dead. They say all those buyers who think they are witnessing their homes being built are actually watching work take place on a completely different project.”
“‘We’ve got nothing to do with Reed Myers,’ Simpson says. ‘Nobody wants to buy the land, so we’re going to have to break it up and sell it on, that’s what we’re going to do.’”
From Bloomberg. “A stabilization of flows for China bonds should occur in the next couple of months after global funds cut their holdings by record amounts the last two months, BlackRock Inc.’s Asia head of credit Neeraj Seth told Bloomberg TV. ‘The broader story around China as a diversification element and the integration of Chinese debt capital markets in the global debt capital markets’ isn’t going away, he said during an interview.”
“China’s overall policy stance toward the property sector hasn’t changed and any fine-tuning is ‘still aimed at containing risks and promoting the long-term health of the industry rather than to bail out distressed players,’ said Moody’s Investors Service. As authorities push for a durable fix to reduce financial risks without triggering a systemic collapse, troubled companies long used to being rescued by the state are realizing Beijing will no longer stop them from going bust. The message is clear: Defaults are crucial to curb moral hazard and reprice risk despite the short-term pain.”