A report from the San Francisco Chronicle in California. “Ben Jiang retrieved a key from a lockbox and worked to untangle a mass of chains securing the front gate of his house. Inside, raunchy graffiti covered several walls and doors, fixtures remained broken, rodent droppings dotted the nasty carpet, and a strange stench filled the air. He bought the fixer-upper in San Francisco’s Bernal Heights neighborhood in October 2020, imagining the dream home it could one day become. Instead, it’s turned into a nightmare. ‘Welcome to the House of Horrors,’ Jiang told me. ‘We’re still as permit-less as ever,’ Jiang told me, adding that the squatters keep coming back, too.”
“Jiang and his wife, Jennifer Sun, continue to cough up huge sums of money — for their apartment rent, the mortgage and property taxes on both their homes, the permitting fees and the costs of securing the Bernal Heights home. The couple said it’s draining their bank accounts and causing major stress during what should be a happy time of expecting a baby. ‘From a financial standpoint, we’re not in a good place, and from a peace-of-mind standpoint, we have none,’ Sun said.”
“Jiang said he’ll probably try to sell it after he secures his permits — and if he can’t break even, he might do the remodeling work and then try to sell it again. But the real estate market isn’t as hot as when he bought the house, and he’s unsure if he’ll have any takers. (Redfin says it’s worth $70,000 less than what the couple purchased it for.) Asked if he regrets ever buying the House of Horrors, Jiang said, ‘Definitely. 100%.’”
The Los Angeles Times in California. “With Los Angeles County’s pandemic eviction moratorium set to lapse in days, the Board of Supervisors has voted to extend the countywide renters protections once more. The moratorium will now expire at the end of March. This, county leaders say, will be the last time they push the end date. Many landlords and property managers called in to Tuesday’s meeting, urging the board to let the moratorium expire in a week as they had originally intended.”
“‘I saw schools and day-cares reopen and still no rent. I registered new Porsches to our garage on two accounts that I haven’t seen payment on in nearly three years,’ said property manager Crystal Beard, adding she’d seen a few renters with over $100,000 in unpaid rent leave to purchase houses. ‘It is enough. It must stop. We need to put an end date to it.’”
Go Banking Rates. “A Realtor.com report found that while starter homes — which it defines as all two-bedroom listings — seem unaffected by the current correction in the housing market, luxury homes have been feeling the full effects. For example, a luxury home in Salt Lake City, Utah, was priced at $1.15 million-plus in December 2022, and the change from the 3-year price peak was down 28.1%.”
Queens News in New York. “In Long Island City, the average apartment price fell 4% over the past year to $1,106,614, with 29% fewer closings than the previous year. Close by in Astoria, at $567,422, the average apartment price was 4% lower than a year ago. ‘Prices have fallen in many neighborhoods over the past several months, which, combined with lower mortgage rates, gives buyers more purchasing power,’ said Gregory Heym, chief economist for Brown Harris Stevens. ‘Prices should continue to drift lower for the next few months as inventory rises and the economy is most likely headed toward recession.’”
CBS Colorado. “Affordable housing continues to be an issue in Colorado’s mountain communities as neighborhoods near Breckenridge are concerned about a proposed cap on short-term rentals. Some claim the proposal could hurt their property values and isn’t the solution to the housing shortage. A meeting in Summit County grew heated on Tuesday as the proposal was discussed. ‘It’s just not fair, it’s not the open dialogue that we would expect,’ said resident Rich Mason.”
“Mason is not in danger of losing his short-term rental property because people with licenses will be grandfathered in but he is worried that a cap on the number of places that can have short-term rental licenses will hurt his neighbors. ‘A lot of them their retirement is wrapped up in their home, I think a small percentage need that income to keep their home. I think a lot of people will be hurt by it,’ said Mason.”
Boca News Now in Florida. “House ‘sold prices’ dropped for both the quarter and the year in Boca Raton and Delray Beach, according to the Elliman Report prepared by Miller Samuel appraisers and advisors. The average closing price of a house in Boca Raton for the fourth quarter of 2022 was $1,246,270. That’s down 1.4 percent from the previous quarter, and 3.9 percent from the same time in 2021. Contributing to the lower selling prices: inventory. There were 627 homes on the market during the fourth quarter of 2022 in Boca Raton, but only 250 a year earlier.”
From Spotlight PA. “Pauletta Fajinmi had been waiting for more than six months. In April, she applied to a Pennsylvania program that promises to help homeowners recover from the financial impact of the pandemic. After Fajinmi’s husband died of COVID-19, in the spring of 2021, she found herself responsible for more than $5,000 in late mortgage payments on the house they had lived in together. She felt like she was living in ‘survival mode.’ The stress and grief made her hair fall out in clumps. She checked online for updates on her application every day, sometimes twice a day. ‘It was a nightmare,’ Fajinmi recalled.”
“One woman, who asked not to be named, told PAHAF in April that her lender had accused her of making the program up. The problem, public records show, was a minor mistake she had made on a crucial form. Even after the confusion was resolved, however, an official at the credit union told the woman that the company was not hearing back from PAHAF. ‘I don’t even know who to talk to up there anymore?’ the credit union worker said. By this point, the woman was almost five months behind on the mortgage. ‘We should have been foreclosing by now,’ he warned. (The credit union declined to comment.) “
From CTV News. “The Bank of Canada’s eighth rate hike in less than a year is coming at a tough time for many Albertans. The central bank raised its overnight ate by 25 basis points Wednesday, moving its policy rate to 4.5 per cent. The Office of the Superintendent of Bankruptcy says in Alberta, there was an 8.5 per cent year over year insolvency jump in November. The 1,402 filings in the month mark the highest volume since March 2020. Experts say the rising cost of living and increasing debt are the culprits.”
“‘People are not getting (wage) increases at all during a time when they’re forking out over six per cent more in their expenses,’ Bromwich and Smith’s Laurie Campbell said. ‘So how are people bridging the gap? They’re using credit, unfortunately, and that, as we all know, only turns into a downward spiral.’”
The Financial Post. “‘Those who argue that another 25 basis points increase will not kill the economy forget that at this stage of the business cycle, the impact of further hikes is not linear. In other words, the marginal increase could be the straw that breaks the camel’s back,’ wrote National Bank economists Matthieu Arseneau and Taylor Schleich. Homebuyers, struggling with the highest borrowing rates in almost 20 years, may also soon face tougher mortgage rules. Canada’s banking watchdog, Office of the Superintendent of Financial Institutions or OSFI, has proposed a number of measures beyond the existing mortgage stress test including loan-to-income and debt-to-income restrictions and debt-service coverage restrictions.”
“‘It’s going to be an interesting spring,’ said Victor Tran, a Rates.ca mortgage expert. Tran predicts that if the Bank hikes the expected 25 bps and the variable-rate hits new highs the spring market may see a surge of investors forced to sell condos, possibly double the usual number. That and a glut of new builds coming into the market in 2023 could bring condo prices down further. A increase in mortgage fraud is also possible as people stretch to buy or renew a mortgage under the higher interest rates, he said.”
Newshub New Zealand. “Loan-to-value ratio (LVRs) restrictions place a cap on how much a bank can lend relative to a purchase point. Currently, most people seeking a loan from a bank to buy a property they will occupy will need a 20 percent deposit. Just 10 percent of a bank’s total lending is allowed to go towards what’s called ‘high-LVRs,’ meaning the loan is more than 80 percent of the property’s” price. For investors, most have to stump up a 40 percent deposit and just 5 percent of banks’ lending can go to high LVRs (meaning a loan of more than 60 percent of the property value).”
“LVRs were removed in 2020 at the start of the COVID-19 pandemic when forecasts for the housing market were weak and the RBNZ wanted to ensure a steady flow of cash. However, after prices instead rose rapidly, LVRs were reinstated – and then tightened – to limit the amount of mortgage borrowing. Kelvin Davidson, CoreLogic NZ’s chief property economist said he doesn’t expect the LVRs to be loosened this year. ‘The current housing downturn isn’t triggering major financial stability risks (such as widespread mortgagee sales) – and technically those would have to be apparent before looser lending rules would start to be pondered by the RBNZ,’ he said. ‘Indeed, in a falling housing market, looser LVRs might actually create their own risks, e.g. greater chance of negative equity if people only require small deposits.’”
From Sky News. “Westpac Chief Economist Bill Evans says the housing market is ‘unravelling’ as house prices come down from their ‘peak.’ ‘We’ve already seen the housing market unravelling, house prices down around eight per cent from the peak and Sydney of course has suffered a lot more than that,’ Mr Evans told Sky News Australia.”
The Korea Times. “Korea’s housing price valuation index is on the gradual decline after hitting a 10-year high in the second quarter of 2021, as the real estate bubble is showing clear signs of bursting on successive key rate hikes over the past year, data from the Bank of Korea (BOK) showed. ‘When loan interest rates rise, this comes as downward pressure on housing prices,’ an official from the BOK said. ‘The high interest rate affects the housing market in a way to alleviate overvaluation.’”
“Starting from August 2021, the BOK ended its cycle of freezing the key rate due to the pandemic. The central bank has since increased the key rate to 3.5 percent, which the monetary authority said played a central role in speeding up the housing market crash.”