A weekend topic starting with KCRG in Iowa. “Chelsie Brown, from Cedar Rapids, is one of many people looking to buy a home in a challenging market. One obstacle she’s run into, and that she’s had to increase her budget since the start of her search. ‘It’s still the same thing. You find a house within your budget, if your budget is 150k, you have to find and look for houses that are 120k, because by the time you get done with everything all said and done and actually make an offer that’s even worth the owners accepting, you’re over asking price,’ says Brown.”
From KPIX in California. “One way that buyers in this hot real estate market are making their offers stand out is by waiving contingencies. ‘Our agents are basically asking the first question: just how uncomfortable do you want to get?’ said Earl Rozran, vice president of experience at Sereno Real Estate.”
From WREX in Illinois. “The housing market is hot right now. Mortgage rates are still near historic lows, and prices and demand are up. But buyers need to make sure they’re not taking on more than they can afford. ‘You simply are just not going to be making annually how much you’re spending on a house so that makes sense,’ said Jill Gonzalez, an analyst with WalletHub.”
From DS News. “The Housing Finance Policy Center Chartbook took a deeper dive into the banner year that was 2020 for first-lien originations, with $4.04 trillion in mortgages originated in 2020, This number exceeds 2003’s volume of $3.73 trillion, the previous record holder, by $315 billion. The 2020 GSE share was up significantly at 59.2%, compared to 42.9% in 2019. The share of private-label securities (PLS) was 0.9% in 2020, down from 1.9% in 2019, and a fraction of its share in the prebubble years.”
“‘The smaller share of portfolio and PLS in 2020 reflects the impact of COVID-19, which made it difficult to originate mortgages without government support,’ the report found. ‘The higher GSE share reflects the large amount of refinances done through this channel. With private capital pulling back significantly because of the economic downturn, the federal government is once again playing the dominant role in the mortgage market.’”
From Money. “Just like lockdown orders unleashed panic buying of toilet paper, the pandemic has fueled a feeding frenzy on homes. Unfortunately, some new homeowners wish they had never stocked up. About a year after the binge began, some homeowners are feeling remorseful and learning that homeownership can lead to heartbreak if you’re not financially and emotionally prepared.”
“In a LendEdu survey, 55% of people said they regret taking out a mortgage during the pandemic. A recent article in the Wall Street Journal profiled homebuyers with serious misgivings about their new homes. ‘I hate this house so much,’ declared one woman who spent $600,000 on a place near Los Angeles last August.”
The Globe and Mail in Canada. “The real estate market in Toronto and other Ontario cities is finally getting fresh listings as rich price tags entice some homeowners to sell. But a gentle stream of properties arriving on the market is doing little to calm the buyers afflicted with ‘fear of missing out.’ ‘People wind up taking big risks. It’s a recipe for trouble,’ warns John Lusink, president of Right at Home Realty Inc., who is watching sales soar across Ontario. ‘It’s like a rocket ship. It’s hard to comprehend, quite frankly.’”
“Mr. Lusink has heard from homeowners who say they have no idea where they are going to go but they want to take advantage of the current mania. Sellers tell him, ‘My neighbour got $1.5-million, and we thought it was worth $900,000, so we’re doing the same.’”
“Elli Davis, an agent with Royal LePage Real Estate Services Ltd., is currently having conversations with a Toronto homeowner who is on the same wavelength. ‘He’s never seen the market higher and it’s time to cash in,’ she says. ‘He’s totally motivated by money.’”
“Ms. Davis points out that not every property goes in a bidding war. And for those that do, house hunters sometimes become so intent on beating the others at the table that they end up with buyer’s remorse. ‘Don’t lose your head because you still have to pay – and the bank might not appraise it.’”
From Global News. “As Canada’s home prices reach the stratosphere, calls on the government to bring the housing market back to Earth — possibly with a soft landing — are growing increasingly urgent. Some of Canada’s big banks have recently joined the chorus. Policymakers should act ‘immediately’ to address soaring property valuations before ‘the market is left exposed to more severe consequences,’ BMO senior economist Robert Kavcic echoed. ‘The action needed today is one that immediately breaks market psychology and the belief that prices will only rise further.’”
From Stuff New Zealand. “Investors and first-home buyers are backing away from the market due to greater uncertainty about the fall out from last week’s housing policy changes, a survey of mortgage advisers suggests. Mortgage advisor Glen McLeod felt the policy changes were rushed and not properly thought through. ‘The reality is those changes are out of step with what’s real in the market. A client in Huntly can now go up to $420,000 but the houses are more like $475,000 which means the houses don’t come under Kainga Ora. It’s not easy to get above 80 per cent lending for any of the banks,’ McLeod said.”
“McLeod called the policy changes a ‘jealousy tax.’ ‘It’s different if you’re targeting investors with hundreds of properties. Most people have one investment property.’”
From Star News in New Zealand. “The return of higher deposit requirements for investors put the brakes on the housing market in March, with property values in Christchurch and most of NZ dipping on January and February levels. The nationwide median property value for March of $735,000 was a retreat of $30,000 on February levels, with Christchurch falling $30,000 to $505,000, while Auckland suffered the biggest fall. Its median value of $1.05 million was a $50,000 drop on the month before.”
“This is likely the result of investors retreating in the face of 40% deposit requirements. This trend seems supported by changes at a territorial authority level, with Manukau in South Auckland – a hot-bed of investor purchases before the return of the LVRs – dropping $60,000 to just below the million-dollar mark. Also dropping out of the million-dollar club was Wellington, where post-Covid price gains retreated $30,000 to $995,000 in March.”
The Sydney Morning Herald in Australia. “If the Australian property market were a party, it’s at that point where the drinks should be put away, the guests kicked out and the bed turned down for a good night’s sleep. Unless the Reserve Bank, the Australian Prudential Regulation Authority and federal and state governments step in soon, the country is going to wake up with a hangover that will last for years.”
“Sydney’s median house value jumped $50,000 in March, or $1600 a day. Since the start of the year, it has climbed $100,000, which, if it doesn’t slow, could see the median house price value reach $1.4 million by year’s end. In Melbourne, the increase has not been quite as sharp but at $60,000 since New Year’s Day, the median house value could top $1 million by Christmas Eve.”
From ABC News in Australia. “Brendon Miszka and his wife are looking to buy their first home but, despite good jobs and a decent deposit, they’re finding it tough. ‘I think we’re competing with a lot of people that would be happier to take a lot more risk,’ Brendon says. ‘There’s a general attitude that you go off to the bank and see what’s the maximum that the bank is prepared to lend and then go out and try and spend all that money on a property and everything will be OK.’”
“At the AFR’s Banking Summit earlier this week, the chair of APRA acknowledged the chorus, but pooh-poohed suggestions that so-called macroprudential lending limits are a fait accompli. Instead, Wayne Byres played down a recent rise in low-deposit loans and mortgages that are at least seven or eight times the borrowers’ annual incomes.”
“‘It does look like it’s pretty highly correlated with what is a significant increase in the share of first home buyers that have been in the market up to this point,’ he told the gathered bankers. ‘It’s not clear to me that’s a problem that we should be doing anything about.’”
“Aspiring first home buyer Brendon Miszka might not agree with him. ‘The size of the loan is kind of intimidating compared to the income and thinking how long it would take to pay all that back,’ he says. ‘When you see listings with price ranges for maybe $1.2 million and the house ends up selling for $1.9 million — every time something like that happens you wonder, ‘Should I think about increasing the budget, should I try and borrow more?’”
“But he and his wife don’t want to get pushed into a life-long debt trap to buy a place to call home.”
From Domain News in Australia. “In the middle of one of the most jaw-dropping property booms in decades it is refreshing to hear that not every seller is making a motza from their real estate. Take billionaire pub magnate Chris Morris and his wife, who have copped a loss on their Milsons Point penthouse this week. The couple paid $8 million for their crash pad in the Latitude building at the peak of the local apartment market in 2017. Di Jones’ Nigel Mukhi wouldn’t confirm what local sources say was an off-market resale for less than the purchase price.”