A report from Realtor.com. “The nation’s surging home prices don’t seem to care about the recession the country is mired in. It has all led some to wonder: Are some markets getting too hot? Could we be entering the dreaded bubble territory once again? ‘Some markets are overvalued,’ says Javier Vivas, realtor.com’s director of economic research. ‘Growth of prices in a recession is pointing in that direction. Some markets are seeing increased risks of price corrections.’”
From KUT in Texas. “Unemployment in Austin is more than double what it was this time last year. Thousands are out of work, either working fewer hours, furloughed or laid off. Yet home prices and sales in the Austin area are higher than normal. ‘The power that (a low mortgage interest rate) gives you as a buyer is really huge,’ Jen Klentzman, an Austin real estate agent, said. ‘You might have thought you needed to be at $300,000, but with the interest rate in the twos, you might be able to afford that $350,000 house. So, it’s allowing prices to stay up because buyers can afford more house.’”
“Socar Chatmon-Thomas, who’s been a real estate agent in Austin for 20 years, worries that some homes may start coming on the market because their owners can’t afford to pay their mortgages any longer. ‘We’re going to start seeing some pain,’ she said. ‘Right now we don’t in Austin. ‘I’m sure we have people here in this city right now who have a mortgage … and are in forbearance. That person does not have a job and that person does not have the pandemic pay any more … what happens next?’”
From KJZZ in Arizona. “Real estate sales in the Phoenix area hit a record not seen since 2007 this summer, according to Arizona State University real estate professor Mark Stapp. Stapp says many factors — including lowered interest rates — are leading to this boom. ‘When you combine the fact that affordability is increasingly a problem, coupled with this potential eviction foreclosure crisis, we could have a significant problem on our hands,’ he said. ‘I think the closer we get to the election, and the more distance we have from the stopping of (economic) stimulus, to the election, it’s going to get even worse.’”
From Palm Springs Life in California. “It seems unlikely, but the coronavirus has created ideal conditions for a dramatic spike in home sales in the Coachella Valley. Michael McDonald of Market Watch LLC told an audience of real estate agents that the conditions are organic, unlike the housing bubble of 2004–2006. ‘That market was driven by an overuse of variable-rate mortgages,’ he says. ‘When interest rates started going back, we had a reset problem, and the only solution at the time was foreclosures. Now, we have forbearance to keep people in their homes.’”
“Incidentally, Walter Neil, CEO of Franklin Loan Center, reminded the agents that forbearance — temporarily suspending mortgage payments — prohibits would-be buyers from borrowing money. ‘To buy, sell, or refinance, they need to get out of the penalty box,’ he says. ‘There are four options to do this: lump sum payment (reinstatement), payment plan, deferral (most common), and loan modification.’”
“Moreover, Neil adds, ‘We’re seeing a lot of appraisals come in below the selling price, requiring buyers and sellers to come together and negotiate. That’s going to continue to happen when we’re in an environment where appreciation is rapidly happening.’”
“How long can the market ride this wave? ‘No one really knows,’ McDonald says. ‘There are no excesses in this market, none that I see. One of the signs of a tipping point is when people are buying because they’re afraid that if they don’t, they’re going to miss out. We’re not anywhere near something like that. Things are solid here.’”
The Wall Street Journal. “Some mortgage lenders are asking customers taking out a mortgage to confirm they don’t intend to seek forbearance, a move meant to keep losses low during a pandemic that has put millions of Americans on shaky financial footing. The unusual requirement comes in the form of a new document included in many borrowers’ closing paperwork. While the language varies, the forms generally tell borrowers that they won’t be allowed to skip payments until their loans are backed by the government, according to forms reviewed by The Wall Street Journal.”
“Lenders can still unload loans that are already in forbearance. Government-backed mortgage companies Fannie Mae and Freddie Mac said this spring they would begin to buy loans in forbearance, but at a discount of either 5% or 7% of the loan’s value, depending on whether the borrower is a first-time homebuyer. The Federal Housing Administration said it would insure loans in forbearance but could charge the lender a 20% fee if the loan goes into foreclosure.”
“Many lenders have responded by tightening credit. Credit-card issuers are closing accounts and lowering credit limits. The Mortgage Bankers Association’s Mortgage Credit Availability Index, designed to gauge access to a variety of mortgage products, shows consumer access to home loans fell about 17% between March and July.”
“For mortgage lenders, the forbearance penalty is an added concern. ‘The hit more than wipes out your margin—over something you have no control over,’ said Esther Phillips, senior vice president of sales at Key Mortgage Services Inc. ‘You can’t control what customers do after you close.’”
“Lenders are still doing everything they can to avoid it, including tightening credit, with wide-ranging effects. Many have raised minimum credit scores and lowered maximum debt-to-income ratios. Bernadette Kogler, chief executive of RiskSpan, a mortgage analytics firm, said lenders are going to pull back on credit and ‘make fewer loans that might go into forbearance.’”
From Habitat Magazine in New York. “It’s New York City real estate’s equivalent of Cher and the cockroach: the pied-a-terre tax on high-dollar, non-primary residences simply cannot be killed. Originally proposed by Sen. Brad Hoylman, a Manhattan Democrat, the luxury tax has been voted down numerous times but now appears to be back on the table, Forbes reports, as the city faces a huge tax revenue shortfall because of the coronavirus pandemic.”
“Cody Vichinsky of Bespoke Real Estate, a firm that focuses only on properties listed at $10 million and above, does not believe a pied-a-terre tax would provide the revenue boon touted by its proponents. Quite the opposite. ‘It’s been reported that if the pied-à-terre tax passed the Senate, it would cut properties priced in the $25 million plus range by 46%,’ Vichinsky says. ‘This would act negatively towards everything that the bill is trying to accomplish, or says that it will accomplish. The entire market would suffer as a result, and the real estate investment potential would weaken in New York.’”
“Broker Rachel Lustbader of Warburg Realty believes there’s an elephant in the room: the effect the pandemic is having on potential apartment buyers at all price levels. ‘People don’t want to commit just on the assumption that we’ll have a vaccine and life will be back to normal,’ Lustbader says. ‘We don’t know how safe the city will be. We (also) don’t know if we’ll be at a point when the appeal of the city will be available: Broadway, movies, theater, department stores and boutiques. That will still be an unknown.’”
From Boston 25 News in Massachusetts. “Families living near so-called ‘Methadone Mile’ describe their neighborhood nightmare ‘reaching new extremes’ in recent months. From a weekly increase in homeless encampments to daily reports of human feces on people’s properties – some have finally had enough. Boston 25 News spoke with several South End residents who have put their home on the market or are planning on doing so in the next month.”
“‘A lot of things that make this neighborhood wonderful don’t exist anymore,’ said new mother Alexandra Krotinger. Krotinger and her husband plan to put their East Springfield home on the market next month. They said they are doing so for the safety of their 11 and a half-month-old son and for their own sanity. ‘I just can’t live like this, and my family needs better,’ explained Krotinger. ‘I keep thinking we’ve reached the boiling point and we haven’t.’”
“Krotinger is among a long list of neighbors who report an increase in daily encounters of human feces on front steps, sidewalks and in alleyways. Neighbors believe the closure of public restrooms during the pandemic and the increase in the number of homeless people congregated in the area has contributed to the escalating problem. ‘Why do I have to weave around piles of human poop in with my stroller,’ questioned Krotinger. ‘It doesn’t make any sense that I’m living in Boston. It’s like a Third World country.’”
“Neighbor Elizabeth Schwartz, who’s a mother to a 16-month-old boy, just put her Mass Ave condo on the market last week. ‘It breaks my heart that I have to leave because I don’t want to leave,’ said Elizabeth Schwartz. ‘It’s just too much.’ Schwartz said she recently had to clean human feces off her front steps after reporting it to 311. ‘If it’s on private property, the city won’t clean it up,’ said Schwartz. ‘Human waste is something you see close to every day.’”
“She said the noticeable increase in homeless encampments, creeping closer to people’s homes, are also hard to ignore. ‘It’s hard to believe you’re driving through a world class city,’ she added.”
From The Stranger in Washington. “It seems Seattle is on the path for a very bad 2021 and 2022. This possibility will become all the more real if Boeing decides to concentrate its production of the 787 Dreamliner planes in South Carolina. The decision, the Seattle Times reports, might be made as early as next month. And if Boeing does move two of its assembly lines over to South Carolina, which is very likely, then an estimated 30,000 employees in Everett are ‘expected to be the loser[s].’ This job loss would extend and deepen the recession that greater Seattle is presently experiencing.”
“For much of the previous decade, Seattle experienced a construction boom like no other. Sixty to sixty-five cranes flew over the city at any given moment. And more buildings were in the works. The total Manhattanization of downtown Seattle seemed only a few years away. This Mahattanization was coupled with an explosion of human-scale or Parisian-scale (around five stories) luxury apartments.”
“It is now impossible to open a local paper or national news website without being met with a story about how Seattle is run by reckless Marxists, or how it is losing small businesses because of rising crime, or how the police department is fleeing the ungrateful city for pro-cop places like Pierce County. And now the BLM protestors are so radical, so rabid, so savage, they’ve moved beyond defiling the statues of dead slave owners and are now defiling the statutes of dead white rock stars from the 90s.”
“What will 2021 and 2022 look like? Because the right is not offering a real solution to the city’s economic problems, these problems will only worsen if the right wins the day, which will likely be the case. But what Seattle should do is generate more income from top earners, significantly increase the spending power of wage earners, and initiate a new building boom, but this time directed at the production of affordable housing.”
“If nothing in this way is done, our downtown will remain as empty as it is today, even after the pandemic is under control. (The idea of getting rid of COVID-19 entirely is a fantasy.) And our glistening skyline will become frozen in time. Or, put another way, it will become nothing more than a sculpture of early third-millennium irrational exuberance.”