It’s Friday desk clearing time for this blogger. “Fannie Mae and Freddie Mac are expected to retain ‘limited and tailored government support’ after they are freed from U.S. control, Treasury Secretary Steven Mnuchin said in a letter to lawmakers. Mnuchin’s response could help quell concerns that bond investors, banks, credit rating companies and even real estate agents have raised about the plans for overhauling Fannie and Freddie, which backstop $5 trillion in mortgage bonds.”
“Groups including the Securities Industry Financial Markets Association, one of Wall Street’s top lobbying groups, have warned that making changes without an explicit guarantee of Fannie and Freddie’s bonds could be devastating to the market.”
“In the fourth quarter, Zillow said the operating cost for each home was an average of $318,667, while the average home sold for $317,155 — a loss of $1,512 with each sale. And that’s before accounting for interest expenses and holding costs, which amounted to an additional $4,895 in losses per home. Mike DelPrete, a real estate tech strategist said one of Zillow’s advantages in the iBuying space is the company’s stomach for ‘sustained unprofitability’ as most iBuyers are currently losing money on the strategy.”
“‘[Zillow’s] entire Homes division is losing tens of millions of dollars each month,’ he said. ‘It’s a bloodbath. They have plenty of cash to burn to withstand the massive losses. It’s pretty staggering.’”
“The Fannie Mae fictitious California employer list started in 2018. With its January fraud alert, the list has grown to 65 companies that appear to be scheming up and down the state. Typically, the borrower and the mortgage loan originator are in cahoots to come up with a fictional job with fictional wages so the borrower can qualify for a home loan. Ok. Fair enough. But, why is Fannie Mae only naming California employment fraudsters? Surely, the other 49 states have their fair share of crooks.”
“Is mortgage application fraud trending? As far as I can find, nobody else was banging the trash can lids on crooked mortgage cronies. And, why not throw the book at the bad guys? Fannie Mae didn’t respond. What about Freddie? Not sure. ‘It’s our policy to not comment on ongoing investigations,’ wrote Freddie Mac spokesman Chad Wandler.”
“The California Attorney General’s office does not provide information about complaints received and the FBI doesn’t have a clear way to track Fannie Mae referrals. Whether Fannie is an outlier or the canary in the coal mine on this issue, here are some things to think about when you know you are on the edge of qualifying for a mortgage. Can you say what you are planning on doing over a loudspeaker? If you can’t, then don’t do it. If somebody tells you the financial upside is worth the risk, or everything is fine or you won’t get caught, just remember when the smack hits the fan everybody always runs to their own corner and points the finger at everyone else. Freddie Mac had a lame but appropriate tagline some years back: Don’t borrow trouble.”
“Once listed for $100 million, an elaborate Beverly Hills spec house has been on the market for about three years, undergoing several major price cuts. Now, the developer, prolific spec home builder Nile Niami, says he’s sold the property for roughly $40 million. But the reality is a little more complicated. The new owner is Joseph Englanoff, according to people familiar with the deal. Mr. Englanoff is one of Mr. Niami’s lenders. Through an entity known as Yogi Securities Holdings LLC, he has lent a company tied to Mr. Niami tens of millions of dollars across a portfolio of roughly half a dozen projects, records show.”
“Among them is the massive roughly 100,000-square-foot megamansion , which is nearing completion in Bel-Air. Slated to list for $500 million, the project was originally scheduled to come on the market in 2017 but has been bogged down by financing and construction delays, according to legal documents and people familiar with the situation. Mr. Niami declined to comment on how much, if any, cash had actually changed hands as part of the transaction, or if the deal was a form of debt cancellation.”
“After spending millions on a renovation, Mingfei Zhao is selling the 12-bedroom, 12-bathroom, 11 fireplace house in Vancouver’s First Shaughnessy neighbourhood, which is a heritage conservation area. He’s listed the property with an asking price of $27-million. If a foreign buyer purchases the Rosemary at full price, they’re looking at $6.665-million, just for property transfer tax and foreign buyer tax, says long-time west side realtor Bryan Yan. ‘Not to mention empty homes taxes, because these guys usually have more than one home,’ he adds. ‘It’s going to be difficult to sell, because in the luxury market right now, based on real estate board stats, there have been no sales.’”
“The number of private landlords has hit a seven-year low, with 222,570 leaving the sector since the government began to cut tax reliefs and increase the regulatory burden. The exodus has reduced the number of privately rented homes by 156,410 since its peak of 5.29 million in 2017, according to Hamptons International. The estate agency’s numbers suggest that the majority who have left are so-called accidental landlords, with one property each.”
“David Smith, of the Residential Landlords Association said: ‘Landlord confidence is at an all-time low. The stamp duty changes are preventing them purchasing more homes, so they’re not expanding their portfolios. There is also nervousness around the Renters’ Reform Bill. It’s a perfect storm.’”
“House prices in Fife dropped more than average for Scotland in December, new figures show. Owners of flats fared worst. They dropped 2.9 per cent in price, to £84,123 on average. Semi-detached was down 1.6 per cent to £140,172 , and the averaged terrace house price dropped 2.25 per cent to £108,631. First-time buyers spent an average of £107,700 on their property – £1100 less than a year ago.”
“The number of properties up for short-term lease in Greece has soared from just 130 in 2010 to over 200,000 by the end of 2019, according to a survey. Chasing fast returns is not just transforming more and more property owners into aspiring hoteliers, but is also bringing a reduction to the revenues expected. Of course, the oversupply of homes has also drastically reduced revenues and yields.”
“Bengaluru’s real estate sector has shown some revealing trends. While one study shows there has been a decrease in the sales of residential accommodation another found that purchases of homes depend substantially upon vaastu compliance. A recent study found the city had around 70,000 unsold housing units, about 52 percent of the total supply.”
“Apartment rents in Hong Kong have dropped to their lowest in almost two years as people leave the city and homeowners opt to lease rather than sell. Rents have been under pressure since the social unrest started in June, with Covid-19 fears now also hurting demand. In several cases, landlords offered tenants discounts as steep as 12 percent off from current levels, said Letizia Garcia Casalino, Colliers International’s head of residential services. Several transactions have been reported with homeowners selling at a loss. An apartment in Yuen Long sold for 13 percent – or HK$1.2 million – less than its original listing price, reports said.”
“Other homeowners who are reluctant to cut their asking prices have resorted to leasing their properties, said Matthew Hung, deputy regional sales manager at Centaline Property Agency. ‘This has increased supply and added to pressure on rents.’ Hung added: ‘Some sellers don’t want to let go of their property at a cheap price.’”
“Attention from regulators spells more trouble for a highly leveraged, loss-making company that’s applied the WeWork model to China’s housing market. The regulators say their preliminary talks with users reveal broader risks in rental loans from Danke and other residential rental platforms in China. The company, which raised $130 million in its New York debut this January, is operating at an operating loss of $324 million during the first three quarters in 2019, a threefold increase on the $100 million loss recorded in the same period of 2018.”
“Ziroom, another apartment rental major in the country, suffered a similar PR crisis after releasing similar exploitative policies during the epidemic. The rental loans add leverage to residential apartment rental platforms, saysWang Shan, analyst and operating director at online stockbroker Tiger Brokers. Wang characterized these moves as an attempt by the platforms to ‘pass the crisis to homeowners.’ The moves especially hurt owners who purchase their real estate with bank loans, she added: ‘Banks are not making cuts on mortgage payments. The capital chain will break if the situation continues.”
“More than one in four new apartments completed in the Brisbane CBD since 2016 remain unsold, according to a new report by valuation firm m3property. The report, which seeks to quantify the level of oversupply and price-discounting in the Brisbane apartment market since it peaked four years ago, has found that a total of 1500 apartments remain unsold across the inner city, or just a little more than 10 per cent of completed stock within 5 kilometres of the CBD.”
“This is up from 8.1 per cent in December 2018 and 8.9 per cent in July last year. The proportion of unsold stock was more than double in the CBD at 25.6 per cent. According to m3property, buyers within 5 kilometres of the CBD copped a 3 per cent loss on average when they resold their new units. The average loss was substantially higher at 7.4 per cent in Brisbane’s inner north, which includes Fortitude Valley, Bowen Hills and Newstead, suburbs that have been swamped with new apartment developments in recent years.”
“At the 90-storey Brisbane Skytower developed by Billbergia and AMP Capital, off-the-plan buyers have been hit by bank valuation declines of as much as 25 per cent at settlement. Those selling units have seen values fall by as much as 10 per cent. A one-bedroom apartment bought off-the-plan for $515,480 in 2014 (and settled in September 2018) is up for sale fully-furnished with an asking price of $470,000, a drop of 8.8 per cent.”