A report from WPTV on Florida. “Zillow is hanging a ‘for sale’ sign on as many as 30 homes in Palm Beach County. Along West Lake Drive in Lake Clarke Shores is a house for sale that has an interesting back story. ‘This house just sold for $434,000 about a month ago. Zillow was the buyer, and they have it on the market now for $411,000,’ said Deidre Newton, a real estate agent.”
“The home is about 1,900 square feet with three bedrooms and is being sold with the help of Newton. She admits the home needs updating. ‘What I think most of us in the business are concerned about is Zillow is the market leader, and they’re selling property,’ Newton said. ‘They’re buying it, now selling it and very little, very little profit in between.’ Zillow’s website estimates the average price for a home in Palm Beach County is up 21.3% from a year ago at $380,668.”
From CBS News. “Zillow’s enemy was its own algorithm — and an under appreciation for the individual nature of a flippable home’s quirks. As one Sacramento, California-based appraiser told Money.com, ‘Zillow can’t smell if 20 cats live there.’”
From CNN Business. “Zillow spokesperson Viet Shelton told CNN Business the company used the Zestimate for Zillow Offers ‘the same way we encourage the public to use it: as a starting point.’ ‘The challenge we faced in Zillow Offers was the ability to accurately forecast the future price of inventory three to six months out, in a market where there were larger and more rapid changes in home values than ever before,’ Shelton said.”
“Nikhil Malik, an assistant professor of marketing at the University of Southern California, said algorithms tend to be good at making fine-grained, short-term predictions, such as for predicting stock prices a second in advance. But there simply isn’t enough data for an algorithm to learn about longer busts and booms, according to Malik, who researches algorithmic pricing and has studied the Zestimate in particular.”
From Newsweek. “Cody suspects something strange is happening in his apartment complex—and he’s documenting the mystery. Cody is based in Atlanta, Georgia, and lives in a large and reportedly fully-occupied apartment complex. He goes outside his building to check which units have lights on—which would indicate that someone lives there. Over half of the apartments appear to be left dark. ‘Where are the people?’ he asks.”
“Some viewers have more practical theories as to what’s going on. ‘They’re investor owned units that are held but empty in order to artificially inflate demand and reduce supply,’ wrote @slithytove2. ‘Zillow owns the rest,’ joked @omaha.brewery.mom.”
From MIX 106 on Idaho. “Starting with the news shared by our friends over at KTVB Channel 7, that rent prices in the Boise actually came DOWN more than 3% in the month of October. This particular study only looks at rent cost, which by the way… I’m paying about $1700 per month for my humble Meridian home but the rent zestimate on Zillow seems to think they could pull in over $2,000 per month, so I guess we’ll see what happens when my lease is up!”
“Now, what about the market for buyers? Well, that seems to be cooling off quite a bit as well. That is, at least according to Boise Realtor Kris Kohn. In this video, acorrding to Kohn, ‘Housing prices have been crazy recently. But are we starting to see a trend at a slower buying market? I’ll show you some market data in Boise, Idaho that suggests the market is changing.’”
The New York Post. “There might soon be new life for the city’s most-watched, stalled residential development — the twin-tower condos known as XI at Eleventh Avenue and West 17th Street. Powerful New York real estate investor Steven Witkoff is in a prime position to take control of the $2 billion project on the High Line where work stopped 20 months ago, sources told The Post.”
“The sources said that Witkoff leads a group that aims to purchase over $1 billion in debt on the project where developer Ziel Feldman defaulted last summer. Construction ceased in late 2019 after the 2016 groundbreaking.The unfinished XI — also called ‘The Twists’ for 26- and 36-story towers set askew from one another by architect Bjarke Ingels — has long puzzled High Line visitors and luxury apartment market-watchers. The project was to have 236 luxurious units priced up to $25 million, a high-end hotel and an elaborate spa.”
“The debt is being sold at auction following a judge’s ruling that Feldman’s HFZ Capital Group owes a prime lender, Britain’s Children’s Investment Fund, $136 million in monthly interest payments since April 2020.”
From Stuff New Zealand. “The report, Walking the Path to the Next Financial Crisis, was authored by Dr Bryce Wilkinson and Leonard Hong and published last Thursday. It was launched by Sir John Key, which is appropriate as his fiscal recklessness and failure to tackle our underperforming public sector have contributed substantially to the current economic problems.”
“The most concerning is the politicisation of central banks. In the late 1980s and early 1990s, most OECD nations gave their central banks a degree of independence and autonomy. This was to help assure the financial community that the monetary authorities would be focused on fighting inflation; and nothing else. Mildly obsessive monetary wing-nuts, a category I belong to, have long been complaining that Mr Orr and other central bank governors have expanded their remit.”
” Wilkinson and Hong look back to the black swan that sparked the GFC; adjustable-rate mortgages that were issued at the American federal government’s urging, and partially backed by quasi state financial institutions. We are seeing this same pattern play out; only on a far more troubling scale. Over the last decade Kiwis have borrowed heavily to get into the housing market. They have been able to afford million-dollar plus mortgages thanks to the cost of borrowing being lower than the economic literacy of our politicians.”
“Now, as inflation begins to take hold, banks are starting to raise rates. Since the GFC, the political and economic Masters of the Universe have deployed every tool available at trying to avoid even a mild recession. They have printed money, they have borrowed money, they have manipulated the interest rates to zero and they have debased not only national currencies but the monetary institutions upon whose credibility the global financial system relies on.”
“‘This time is different’ is the mantra repeated before every major calamity in the last century. This time isn’t different. For three decades, from the fall of Ruth Richardson, this country has been run by politicians and public servants with a short-term focus; by those either ignorant of, or wilfully blind to, the lessons of the past.”
From SKY News. “According to documents obtained by The Australian – both APRA and the Reserve Bank were looking into home loan controls as early as February. ‘Welcome to the real world where they’re always too slow to act, they’re always reactive, and always after the event, and always terribly cautious about things,’ Sky News Business Editor Ross Greenwood told Sky News host Peta Credlin. ‘But understand – especially in APRA’s case – it’s all about banking stability, as it is for the Reserve Bank. What they’re really worried about is that people take on mortgages that are way too big that there is some shock at the end of all of this, and really those people can’t afford it and that ultimately hurts the banks.’”
The Diplomat. “Amid the cacophony of recriminations over how Evergrande arrived at the brink of collapse and the question of complicity on the part of the Chinese government, it would be wrong to place the blame solely at the feet of national regulators. In fact, without the help of its auditor – Big Four grandee PC – Evergrande would not have become the bloated, debt-addled danger of 2021. Indeed, concerns have been raised over the sustainability and long-term solvency of Evergrande’s business model for years, yet its auditors gave the firm a clean bill of health as recently as this spring.”
“While their laissez-faire attitude in the face of Evergrande’s growing problems has prompted Hong Kong’s accountancy regulator to open an investigation into their work, the incident should serve as a watershed moment which leads to far greater scrutiny of the ‘Big Four’ auditing firms in general. Culpability for the company’s sharp fall from grace must lie with its borrowing strategy, which has spiraled out of control in the last decade, as well as the Chinese government, which turned a blind eye to its mismanagement.”
“However, fingers are also being pointed at the Evergrande auditors PwC. As far back as 2017, GMT Research published a report highlighting how PwC’s acceptance of Evergrande’s unsold car parking spaces and commercial properties as investments rather than inventory was highly irregular and distorted its balance sheets, as did its decision to capitalize all interest payments and exaggerate the value of certain assets. For China, there are many important lessons to be heeded. If Evergrande has taught Beijing one thing, it’s that many of its enterprises are overindebted and trying to hide it.”
The South China Morning Post. “Shares of Fantasia Holdings Group. plunged by almost 40 per cent to a record low on Wednesday, after the debt-laden Chinese developer defaulted on a US dollar bond, further warning there is no guarantee it could meet other financial obligations. The Hong Kong-listed developer said in a filing late on Tuesday that it did not repay a US$205.7 million bond that was due on October 4. Apart from its 2021 notes, Fantasia said that there were no other overdue bonds and loans of a material nature.”
“Fantasia’s missed payment came just two weeks after the company said it had no liquidity issues and had ‘already prepared the funds’ to redeem its bonds due this month. It had obtained HK$1.1 billion (US$142 million) of financing from Chiyu Bank in June, it said at the time.”