A report from Market Watch. “Researchers pointed to Miami as an example for their argument. During the market’s peak in late 2006, buyers there paid nearly $340,000 on average to purchase a home. Only now are many of those buyers able to sell their home for a profit, they said based on their analysis. ‘With the dramatic fluctuations that we’re seeing now, wealth creation through housing is not guaranteed, making homeownership a sometimes-risky investment,’ Ken Johnson, an economist with Florida Atlantic University and the report’s second co-author.”
From Bloomberg. “U.S. home mortgage lenders have spent much of the last two years hiring. Now they might have to spend the coming months laying workers off. Layoffs in the industry are inevitable, said Jeff DerGurahian, chief capital markets officer at LoanDepot Inc., one of the largest lenders to consumers outside of the banking sector in the U.S. ‘With rates moving higher, capacity is going to be adjusted across the entire industry,’ DerGurahian said.”
“Lenders in general are trying to find more work for their staff by lowering their standards a bit. Another area that lenders might focus on more before laying off staffers are borrowers that can’t document income and therefore don’t qualify for mortgages backed by government-sponsored enterprises like Fannie Mae. The home loans for these borrowers, in particular the ones known as ‘non-qualified mortgages,’ might become a bit more popular.”
“‘With refi volume down, lenders will have to work on something else. We think they could focus on non-QM, which take longer to underwrite,’ said Sujoy Saha, RMBS analyst for the structured finance team at S&P Global Ratings.”
From CNBC. “‘Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022,’ said Joel Kan, MBA’s associate vice president of economic and industry forecasting.”
From Investing.com. “CoStar stock plunged more than 10% Wednesday after a proposed tripling of an investment in its residential segment led analysts to cut their price targets. Needham analyst Mayank Tandon believes the outlook came in below consensus estimates ‘due to a combination of ongoing softness in the multifamily segment and a significant step-up in investments to drive long-term growth in the residential segment.’”
The Real Deal. “A student housing empire already struggling with foreclosures and lawsuits has made a multi-billion-dollar enemy: Fortress Investment Group. Nelson Partners Student Housing was the subject of a legal notice filed earlier this month by an affiliate of Fortress. The New York Times reported the company controlled by the investment giant is looking to foreclose on a $46 million loan owner Patrick Nelson took out in November 2019 to acquire the Auraria Student Lofts in Denver.”
“The Times reported at least two contractors at the Auraria also obtained court judgments, claiming Nelson Partners owes them approximately $100,000 for work done at the building. In a written statement to the Times, Nelson claimed he was a victim of the investment giant’s dealings.”
“‘The vultures at Fortress bought the loan just weeks before the loan expiration for one reason: to foreclose on a healthy property that has performed well over seven years with the intent to steal millions of dollars in equity they are not entitled to,’ Nelson wrote.”
The Globe and Mail in Canada. “In the opening weeks of 2022, emotion in the Toronto-area real estate market seemed to verge on hysteria. Mid-way through February, that feeling is beginning to dissipate. Some agents say they are seeing fewer showings on new properties and fewer bidders at the bargaining table. Some properties are failing to sell on offer night. ‘The wind is starting to change a little bit,’ says James Warren, a real estate agent with Chestnut Park Real Estate Ltd.”
“Some agents say they are seeing fewer showings on new properties and fewer bidders at the bargaining table. Some properties are failing to sell on offer night. Mr. Warren says listings have picked up in February and with more inventory there’s slightly less FOMO, or fear of missing out. Shane Little, a real estate agent with Re/Max Hallmark Richards Group Realty in Toronto, says showings on one booking platform that agents use are down 49 per cent from last month and 45 per cent from the same time last year.”
“He’s not seeing a lot of properties that fail to receive offers on offer night in the east end where he does a lot of his business, but he is seeing fewer bidders at the table. When demand was at a fever pitch and listings were rare in January, properties were selling for prices far above even recent comparable sales. ‘Buyers who maybe shouldn’t have been bidding on homes were, leading to more offers and artificially adding to the final sale price,’ he says.”
From Newsroom New Zealand. “‘Will house prices actually drop? I think it’s quite possible,’ said our Point Home Loans mortgage adviser Janet Harris yesterday afternoon. Since the law changed on December 1, lenders must have written evidence that taking on a loan won’t cause the borrower financial hardship. Mortgage managers had begun looking very closely at potential borrowers’ spending, I warned then, and would demand to see statements from all their bank accounts and credit cards.”
“This year, that’s come to a head. It has been, says the law firm JD Supra, ‘one of the stories of the summer’ – and not happy reading for the Government. Reports abound of those told they had spent too much on their dog, on their weekly Friday night fish and chips, or turned away because of their Netflix subscriptions. Heartland Bank is taking two hours to pore over wannabe borrowers’ bank statements, chief executive Chris Flood says, and declining three times as many car loans. ‘I haven’t spoken to a banker that doesn’t like the intent of the law, to get rid of predatory lending,’ he tells the NZ Herald today. ‘I think it is a curse on the lower socio-economic [group] who can get caught in those debt traps.’”
A press release. “For months, China Evergrande Group has been teetering on the brink of insolvency. On several occasions, China’s second-largest real estate developer, which has accumulated more than $300 billion in debt, has defaulted on interest payments on U.S. dollar bonds. Now an international creditor, in cooperation with DMSA Deutsche MarktScreening Agentur GmbH, has filed an allegation of criminal conduct against the Evergrande holding company for committing insolvency fraud.”
“Things are getting tighter for Evergande: A bondholder, Liechtenstein-based Financial Market Partners Capital (FMPC) Consulting AG, filed an allegation of criminal conduct on Friday, February 18, 2022 for insolvency fraud against the Cayman Islands-registered Evergrande holding company. FMPC Consulting AG was supported and advised – in addition to internationally active insolvency lawyers – by DMSA Deutsche MarktScreening Agentur GmbH.”
“DMSA Managing Director Michael Ewy explains, ‘With the allegation of criminal conduct, we are trying to save what can be saved for FMPC Consulting AG and other international creditors.’”
The South China Morning Post. “Hong Kong’s lived-in home prices suffered their biggest drop in almost two years. Some desperate owners have sold their apartments at a loss as they flee the city’s worsening Covid-19 crisis. Canto pop star Joey Yung has sold her one-bedroom 465 square-foot flat at Park Haven in Causeway Bay for HK$10.25 million according to sources. The selling price was HK$1.1 million (9.7 per cent) below the HK$11.35 million paid for it in 2012.”
“On Wednesday, a 1,030 square-foot unit at Festival City in Tai Wai sold for HK$12.68 million (US$1.62 million) after the owner cut the asking price by 12.5 per cent, or HK1.82 million, according to Midland Realty. The transaction was about 10 per cent below the market price. A 454 square-foot flat at Island Resort in Siu Sai Wan changed hands for HK$8.2 million, about 12 per cent below market prices, according to property agent Century 21. The vendor had slashed the asking price by HK$1 million to facilitate the deal.”
From Nine News. “A huge cloud hangs over $5 billion in building projects around Australia as Probuild, one of the country’s largest construction companies, this morning plunged into shock administration. In a Probuild statement, it was confirmed Deloitte has been appointed as administrator after WBHO Australia was ‘abruptly informed’ by parent company WBHO South Africa that all cash and securitisation support would cease for the Australian arm. This includes Probuild, WHBO Infrastructure and Monaco Hickey.”
“Tradies this morning turned up to a large Probuild building site in Melbourne’s CBD to try and get rescue their tools, only to find the entry gates locked shut. ‘Just got told, pack up your tools we’re done here. Probuild’s gone bust. No notice. Bit of a worry,’ one tradesman told Today. ‘We’ve seen it coming for a while. We’re a bit upset.’”
“Workers told 9News of chaotic scenes yesterday, as hundreds of tradies were booted off worksites across the country. Subcontractors are believed to be owed huge amounts of money. A tradesman who fled one of the building sites told 9News: ‘All the contractors are owed hundreds of thousands of dollars. No one’s going to get their money,’ he said.”