A report from Mortgage News Daily. “Sometimes, someone unexpected comes into your life outta nowhere, makes your heart race, and changes you forever. We call those people cops. (Where did you think that was going?) There are always riddles and surprises out there, but one is not originators helping borrowers create wealth through leverage and tax savings. Lenders are, in one sense, in the business of creating wealth.”
“When it comes to the Fed, the question isn’t when, but how much, it will hike the overnight Fed Funds and Discount rates. As Bloomberg says, ‘Contrary to what many people seem to believe, the Fed doesn’t have a magic wand to bring down inflation quickly and painlessly…What the Fed does have the capacity to do fairly quickly, if it gets things wrong, is crash the housing market, the stock market, and the economy.’”
From Reuters. “Emerging markets must brace for monetary tightening in the United States and Europe while central banks must be clearer in their policy communication to avoid confusion, financial leaders of the world’s 20 biggest economies are likely to warn this week.”
“To address the potential spill-overs to emerging markets of tighter monetary policy in the U.S. and Europe the IMF called in January for emerging economies to start working on defences now, reducing levels of debt in foreign currencies, hedging exposure, extending maturities to cut roll-over risk and prepare for bankruptcies of banks and companies. The same message is likely to come from the G20 meeting this week, the European document showed.”
From Capital and Main on California. “Connie Der Torossian, executive director of Homeownership OC, is an Orange County-based housing counselor who helps homeowners figure out ways to stay in their homes and safeguard their credit. ‘We had lots of people who had been on forbearance for over a year, and we can’t make the numbers work,’ said Der Torossian. The holidays provided some reprieve from foreclosures, but she expects that to change.”
“Robert Salazar is one who is leaving the state. His wife, Elena, was off her job staffing a hospital weight loss surgery unit for six to eight months during the pandemic. The couple received six months of forbearance from their mortgage servicer before filing for bankruptcy. In December, they decided to sell the house they purchased together three years ago and move to Arizona, where the cost of living is lower and they have family. A truck driver for In-N-Out Burger, Salazar, who is 50, was able to secure a transfer from his employer. He’s looking forward to the move. ‘It’s not fun living paycheck to paycheck,’ Salazar said. ‘We’re tired of being house broke.’”
“Guy Hart, who lives in a condo in Santa Monica, does not have a federally backed loan. His income dipped during the pandemic when the tenants in the duplex he owns as an investment property fell behind on their rent. He complied with the eviction moratorium and kept his tenants housed. Meanwhile, his servicer, Irvine-based Rushmore Loan Management Services, gave him only three months of forbearance on a condo that he bought for $330,000 in 1998. Rushmore began foreclosure proceedings against him last April.”
“Hart is in arrears by approximately $40,000 on the condo, said Sarah Shapero, his attorney. He fought off foreclosure years ago but was current on his mortgage before COVID struck. ‘I love the place and have worked really hard to get it and to maintain it,’ says Hart, who is 55. ‘I don’t think because of the pandemic and everything that transpired that I should be punished for that.’”
The Star Advertiser. “Hawaii’s neighbor island housing markets reported mixed numbers in January after setting median sale price records in 2021 for single-family homes and condominiums. Kauai saw its single-family home median price sink 10.7 % to $925, 000 from $1,036,000 and the median condo price fall 10.8 % to $490, 000 from $549,000.”
The New York Post. “A limestone mansion once owned by the late entertainment mogul Robert F.X. Sillerman has sold for $7.7 million. That’s $4.3 million less that what Sillerman and his wife had paid for the residence at 151 E. 72nd St. when they bought it for $12 million in 2013.”
From Bloomberg. “In London’s Royal Albert Dock, almost two dozen buildings conceived of as a new Chinese Canary Wharf stand mostly empty and in the hands of lenders who have finally pulled the plug. About 10 miles to the west, some construction workers angry at not being paid have downed tools on Guangzhou R&F Properties Co.’s flagship development in Nine Elms. And in Paternoster Square, in the heart of the City of London, the tycoon behind embattled developer Shimao Group Holdings Ltd. is in talks to sell a prize office building previously occupied by Goldman Sachs Group Inc.”
“It is a sign of how ripples from China’s troubled property markets are making waves overseas. ‘China’s debt-saddled private developers face growing risks of a liquidity crunch, with home buyers and bondholders’ shattered confidence raising the specter of broader financial contagion,’ Bloomberg Intelligence senior analyst Patrick Wong wrote.”
“The sharp reversal is a familiar pattern in London’s boom and bust real estate market that has seen successive waves of international capital wash in and out. The global financial crisis brought an end to a surge in debt-fueled Irish investment in the U.K. capital while Japanese investors racked up huge losses two decades earlier. ‘It isn’t that different from what we saw from Japanese investors a few decades ago,’ Andrew Thomas, London based head of international capital markets at broker Colliers International Group Inc said in an interview.’They ended up selling properties from their international portfolios in order to help stabilize their domestic markets.’”
The Guardian. “With the Federal Government’s legacy Railway Modernisation project, among other infrastructure, largely financed by loans from China, the hopes of millions of Nigerians looking forward to the ease that the project would bring to livelihoods and its impact on the economy when completed, may be dashed. Sources close to the discussion said China is gradually losing confidence in the ability of the country to manage the projects efficiently and be able to offset the facilities extended to the country. A source said China is concerned about the rising debt profile of the country. Hence, they are reviewing their relationship.”
“Back home, China is currently prioritising its relationship. The country is struggling to rescue the economy blighted by Evergrande crisis. In the last quarter of last year, Chinese property developers faced $10.2 billion in offshore debt. The figure is almost double this quarter, analysts have said.”
From Yahoo Finance. “Economists at Commonwealth Bank and National Australia Bank are forecasting house prices to fall by 10 per cent next year and Westpac has forecast house-price falls of 7 per cent in 2023 and a further 5 per cent in 2024. The forecasts are predicated on the assumption that the Reserve Bank (RBA) will begin raising interest rates later this year and housing will be ‘collateral damage’ in the RBA’s efforts to keep inflation on target in the medium term.”
“But if house prices fall by the amounts predicted this time around, that will make it the biggest housing downturn in modern history.”
The South China Morning Post. “Shenzhen’s housing market has gone into deep freeze. Sales of second-hand homes plunged 60 per cent to 40,699 last year, from 95,273 transactions in 2020, according to data provided by the Shenzhen Real Estate Intermediary Association. Last year’s volume was the lowest since 2007. ‘The upwards-spiral era of home prices is gone, and home buyers are more willing to wait on the sidelines,’ said Fion He, director of Midland Realty’s research unit. ‘The trend is particularly clear when we look at the dormant lived-in homes in Shenzhen after reference home prices were released last year.’”
“The cool down of China’s US$1.7 trillion housing market is actually a result of rounds of cooling measures rolled out since 2017 to stem a housing market bubble. The administrative measures included caps on land and new home prices, restriction of resale of lived-in homes, hiking mortgage rates and a deleveraging campaign on home sellers.”
“The reference price of lived-in homes at 3,595 housing estates in Shenzhen was set between 10 per cent and 40 per cent below the prevailing market prices in the city, according to data disclosed on February 8 by the Housing and Construction Bureau. The lower reference price reduced the amount of mortgage financing that buyers can borrow on, because banks use them as the basis for their valuations.”