A report from Politico. “The booming housing market helped stave off economic collapse in 2020. But soaring prices are starting to worry policymakers. The current pace of home price appreciation is unsustainable, they say. ‘I am worried that the price run-up is going to choke off first-time buyers,’ said Lawrence Yun, chief economist for the National Association of Realtors. ‘This simply cannot continue. One wonders what is the end game, how does this play out given the heated market conditions of too many buyers, multiple offers? As prices simply outpace people’s income by a large margin, people won’t qualify to get a mortgage.’”
From CBS 4 in Colorado. “The housing market in the Denver metro area has seen a dramatic increase in home prices of more than 20 percent over the past year. ‘It’s been crazy but it’s also very gratifying to be in a market that’s so appreciating,’ said Dee Nielsen, a new homeowner in Littleton who started thinking about buying last year. ‘I knew no matter where I bought and what I bought, I was buying something that was an investment to me.’”
“Lori Abbey, a realtor said prices increasing by double digits in one year is significant on its own but more than 20 percent is unheard of and she understands why buyers may be scared by that figure. But she says the data is supported by more people working from home in a pandemic, including those moving to Colorado from the coasts who are willing to spend more money in a relatively cheaper housing market. ‘It’s not a bubble, it’s a what is actually called a boom, we are now becoming a big city,’ Abbey told CBS4.”
“‘It’s going up so high and it’s not dropping,’ Nielsen said. ‘Have faith in the state we live and the time we live and that’s it for me, I don’t have any doubts.’”
From Cal Matters. “Until recently, San Francisco was often in the headlines for being one of the most expensive places in the world to live. But since last March, the number of people leaving the city on net jumped an eye-popping 649% compared to the same period in 2019, based on the California Policy Lab’s analysis. As far as Heidi Hart can tell, all the anxiety has actually supercharged the housing market.”
“‘It feels like people around here have kind of accepted this ridiculous, expensive market, and they want more of it,’ said Hart, fresh off her best year ever as owner of Santa Cruz County’s California Dreaming Real Estate. ‘It’s like it’s a drug or something. There’s money coming out of the woodwork from everywhere.’”
The Los Angeles Times in California. “For years, spec developer Nile Niami has teased ‘The One’ — a 100,000-square-foot mega-mansion in Bel-Air that he hoped to sell for $500 million. But his plans are now in peril. Niami borrowed $82.5 million from Hankey Capital in 2018 to build the extravagant home. Over the last three years, that debt has ballooned to more than $110 million, and Hankey wants its money. The lender just served Niami a notice of default on the prized property, which is considered the first step in the foreclosure process. If Niami can’t repay the loan in 90 days, Hankey could force a sale of the home.”
“Default notices are nothing new for Niami. He received two in 2020 alone: one for a debt of $10 million on a property he owns at 1369 Londonderry Place in the Hollywood Hills, and one for a debt of $23.4 million on a mansion at 10701 Bellagio Road that he’s currently trying to sell for $59 million in Bel-Air. He took out a $200,000 loan from Compass for a separate Bel-Air property he was trying to sell in 2019, and the real estate company sued him in October for failing to repay it, records show.”
The Real Deal on New York. “A deal that will serve as a benchmark for how values have held up at 220 Central Park South is underway. The owner of unit 55B has accepted an offer from an unknown buyer. Once finalized, the deal will be closely scrutinized by the industry, particularly considering the diminishing resale values of apartments along Billionaires’ Row.”
“Even before the pandemic, nearly 40 percent of condo resales in Midtown closed at a loss — the worst of any neighborhood or property type, according to StreetEasy. Now, amid the pandemic and with a glut of new development condos on the market, that landscape is even more challenging unless sellers are willing to accept discounted offers.”
“‘I think many will be curious to see if resales follow the same path that One57 has taken, with substantial discounts from the original contract price,’ said appraiser Jonathan Miller, referring to Extell Development’s nearby tower where owners have resold units at significant losses in the past year.”
From Reuters. “Canada’s red-hot housing market has become a bonfire, spurring comparisons to earlier bubbles and prompting calls for cooling measures. But policymakers are standing back, unwilling to intervene for fear of undermining Canada’s still-fragile economic recovery from the COVID-19 pandemic. While Bank of Canada Governor Tiff Macklem in February acknowledged ‘some signs of excess exuberance’ in the housing market, he downplayed the need for action.”
“‘Right now the economy is weak, we’re just coming out of the second wave. I think we need the support, we need the growth we can get,’ Macklem said.”
“‘If you got in four months ago, you just made C$100,000,’ said Ottawa agent Judy Corriveau of entry-level homes popular with investors. ‘As far as investments go, it’s a lot better than the stock market … Unless you got in on GameStop,’ she said.”
“But a senior government source said ‘now is not really the time to be ratcheting anything down,’ pointing to the ongoing economic pressures. Broker Corriveau in Ottawa said it is ‘heartbreaking’ to see first-time buyers struggle. ‘You don’t know if there is going to be that one person who has lost 10 bidding wars and now is going to bid C$50,000 more than necessary just because they want to be done with it.’”
From Stuff New Zealand. “In a letter to Reserve Bank Governor Adrian Orr late last year, Minister of Finance Grant Robertson asked the Reserve Bank to consider government housing policy (specifically, regarding house prices) in relation to the Reserve Bank’s monetary policy functions. In her 2017 analysis, housing researcher Jenny McArthur pointed out that New Zealand’s debt – much of it tied up in household mortgages – is the ‘elephant in the room’ with regards to housing affordability. The reality is the vast majority of people do not buy houses with money they already have – they rely on mortgage debt financing.”
“As McArthur points out, ‘we simply couldn’t have seen the excessive price rises over recent years without a permissive debt market that allows households to take on mortgages up to twelve times their income.’”
From Domain News in Australia. “Driving over Granville’s railway bridge in peak hour traffic can take up to 20 mins for Tony Eltakchi. The stretch of road is less than 200 metres but the disproportionate scale of congestion, he says, comes from the nearby high-rise residential towers, all built in recent years. When asked who is buying these high-rise apartments, Mr Eltakchi, a local real estate agent, said. responds: ‘No one that I bloody know of. Ever since these monstrosities were built, especially in Granville, they can’t sell them, so they’re leasing them.’”
“Property price data backs this up. Sydney’s worst-performing suburbs and property type, over the past five years, are almost entirely units in the western suburbs. Granville, Merrylands, Auburn, Kellyville, Parramatta, Harris Park, Wentworth Point: prices in each of these suburbs have fallen between December 2015 and December 2020, some of them by 13 and 15 per cent.”
“This was happening against the backdrop of large investor demand all but drying up in parts of Western Sydney, which relies on immigration and the international student market, said economist Ryan Felsman. But with cheap finance and stimulus from the government, property developers would continue to build, he said. Architect and City of Sydney councillor Phillip Thalis, who helped develop a number of Sydney’s most important urban projects, slammed the developments for failing to fulfil the original vision.”
“‘This is the most rapacious period in Sydney’s history. The rate and scale of change is shocking to many people. There are a lot of people building buildings who wouldn’t want to live in them themselves,’ he said.”
From BBC Business on the UK. “NHS worker Holly Ciesielczuk bought 75% of her first-floor flat in Redbridge in March 2019, under shared ownership. But when she tried to borrow more money to increase her share of ownership a year later, she hit a stumbling block. Following their initial survey, her mortgage lender requested an EWS1 form, which can be obtained following an assessment of a building’s external walls.”
“These were first developed to assess the potential financial impact of cladding on high-rise flats, after 72 people died at Grenfell Tower. After the government extended its advice to smaller properties in January 2020, mortgage lenders began demanding fire surveys from a much wider range of sellers. The reason Holly was given by her lender for requesting one was that a balcony on the building had a wooden floor.”
“However, she says her housing association would not agree to an EWS1 because, it said, the building was not high enough to meet the criteria. The lender refused a mortgage without it, as did the next bank she tried. The combination of this and her partner’s cancer diagnosis took its toll. ‘I properly broke down. If I knew how much stress this was going to cause, I would never have bought my flat,’ she told the BBC.”
“Rebecca Frisina and her family were hoping to move to a larger property, but have been unable to sell their flat. Although they have found a buyer, the mortgage provider has requested a EWS1 form for their property. Rebecca’s family are now living with her parents and their buyer has moved into rented accommodation. ‘We have asked for a rough estimated timeline and they have refused to answer us,’ she says. ‘It’s been a nightmare.’”