A report from the Idaho Statesman. “Newly constructed homes in Ada County dropped from a median price of $601,301 in November to $579,990 in December. The relative affordability that once helped attract buyers from more expensive places has partially worn off. ‘With inventory going down, it’s really going to depend on are people still working from home and are they going to continue to move here?’ said associate broker Christina Ward. ‘Or has everyone moved here that’s going to move here?’”
From Socket Site in California. “Restored Mayor’s mansion Quietly Sold at a Big Loss.”
The Albany Business Journal in New York. “The legal wrangling over the former Kenwood Convent isn’t over. The property owner has notified state Supreme Court in Albany it’s appealing a ruling handed down in December in favor of the lender trying to foreclose on the secluded, 75-acre property at 451 Southern Boulevard. Jacob Fryman, Kenwood Commons LLC and two trusts that borrowed $5 million from TGB Funding LLC of Brooklyn filed the notice Dec. 30.”
“Frydman, a real estate developer, unveiled plans in fall 2018 to convert the former convent into a $500 million retreat with more than 2,000 apartments, condos and townhouses as well as two hotels, retail stores and other uses. Although some renovations were done to the buildings, the project didn’t move forward. Contractors filed liens, taxes weren’t paid, and the property was put up for sale.”
The Real Deal on Illinois. “The former Cambria Chicago Magnificent Mile hotel in Streeterville was sold at a discount of almost 50% in December to an enterprise owned by Marc Realty Vice President Gerald Nudo, capping off a tumultuous two years for the business.”
“Though Nudo paid $18.8 million for the property, the full purchase price of what is now the Hotel Audrey came out to about $24 million, including furniture, fixtures and equipment, according to Crain’s. That’s roughly half of the $45 million the sellers sunk into the property since acquiring it in 2012. Chicago hotels have been among the pandemic’s hardest hit businesses, with more than half of the city’s hotels at least 30 days delinquent or in special servicing, a step toward resolving a debt, often by a sale.”
From Bloomberg. “The amount of government bonds hitting the private sector is set to swell in 2022, adding pressure on yields to rise further as investors across most major markets absorb much larger helpings of debt. While governments are set to pare borrowings as fiscal outlays ease, the $2 trillion drop in central banks’ net demand will provide a risky real-world test of how much private demand exists. With inflation driving most policy makers to err on the side of tighter settings — some central banks already plan to start trimming their balance sheets — investors will need to absorb an increase in effective supply of about $230 billion.”
“‘The inflation genie may well be out of the bottle, and in that case the extra bond supply threatens to become part of a vicious cycle that sends yields grinding higher because price pressures will force central banks to go on trimming QE,’ said Stephen Miller, an investment consultant at GSFM, an arm of Canada’s CI Financial Corp.”
The Globe and Mail in Canada. “If you find yourself in a hole, the first thing to do is stop digging, or so goes the old saying. But that’s wrong. The very first thing to do is admit you are in a hole, or at least stop bellowing at those attempting to point out that fact. So it goes with Canada’s real estate market, and even the most modest of taxation proposals to slow down the runaway growth of housing prices (and give younger Canadians a slender chance of owning a home).”
“Exhibit A: an idea floated by University of British Columbia professor Paul Kershaw and dozens of other experts for an annual surtax on properties worth more than $1-million. Those three letters – T A X – were enough to tee up predictable outrage about Ottawa being hell-bent on confiscating the hard-won assets of Canadians and threatening them with impoverishment in their retirement.”
“It bears repeating that the federal government has shown no interest in a broad move to tax principal residences, although the Liberals have promised a so-called flippers’ tax that would extract a smallish levy from anyone selling a home without an officially sanctioned rationale. Equally spurious is the notion that a housing tax, in any form, represents a mortal danger to retirement plans. For a start, you’d need to believe that those retirement plans were predicated on an unending surge in real-estate prices. That’s not planning; it’s wishing for a pony, and a unicorn to boot.”
From Radio New Zealand. “Although the share of loans on shorter term fixed rates is dropping, it remains fairly high, with 54 percent due to be refinanced within the next 12 months, said CoreLogic’s chief property economist Kelvin Davidson. ‘When you add in 11 percent floating debt, you’ve still got about two-thirds of loans in New Zealand that will be exposed to higher mortgage rates fairly shortly. That will be a headwind for the housing market itself, as well as the wider economy as households are forced to divert their spending towards mortgage debt repayments.’”
“Davidson said he would also be keeping a close eye on the lending data by LVR – especially how tough the banks prove to be on the share of owner-occupier lending done at a low deposit. ‘In 2017, when the speed limit was last set at 10 percent, in practice the banks operated much more cautiously at only 5 percent of lending at a low deposit/high LVR. If history repeats this time around, there is still plenty of tightening yet to come for low deposit lending, which is likely to hamper first home buyers the most – just at a time when they’re reportedly also being hit very hard by the CCCFA requirements around more stringent income and expense testing.’”
From Stuff New Zealand. “Another issue would be the impact of higher mortgage rates on the many borrowers who had fixed loans due to refinance, Davidson said. ‘If someone fixed for one year in May last year at about 2 per cent, they are looking at a rate of 4 to 4.5 per cent in a few months’ time when their term is up. It’s quite a change.’”
From CNN Business. “China’s real estate sector is having a rocky start in 2022, as some of the country’s most high-profile developers struggle to shake off a crisis that has been growing for months.This week, two major credit rating agencies downgraded Shanghai-based developer Shimao Group further into junk territory. The company has been grappling with mounting debt and is considering selling some properties to reduce its debt load.”
“‘Shimao’s liquidity has significantly deteriorated — the decline is worse than we previously anticipated,’ said S&P Global Ratings, which cut the company’s credit rating to B-. Just two months ago, S&P was still rating Shimao as investment grade. ‘We now assess the company’s liquidity to be weak.’”
“Other developers — including Kaisa and Fantasia — are also struggling with the fallout from the real estate sector turmoil, as the deepening slowdown in the property market,coupled with risk aversion among banks and investors, makes it harder for them to refinance. On Tuesday, analysts from Morningstar said liquidity stress in China’s property sector could become a ‘downward spiral’ because of all the credit rating downgrades, which will cut off developers from accessing capital markets even more.”