It’s Friday desk clearing time for this blogger. “The coronavirus pandemic has weaved two opposing narratives in the U.S. housing market. On one hand, it has buoyed home prices amid extremely tight inventory and frenzied demand. On the other, it has pushed some homeowners to a financial brink, where they cannot keep up with their monthly mortgage payments. The Mortgage Bankers Association reported that 8.22% of home loans were delinquent in the second quarter, almost double the rate from the first. This was the largest increase from the preceding quarter in the four-decade history of MBA’s delinquency survey.”

“‘I can’t help but ask myself: Are home buyers being influenced by scarcity economics, even more so than low inventory levels?’ asks Victoria Macaskill of Denver Homes. ‘As certain household products become difficult or impossible to obtain (toilet paper, Clorox wipes, calorie-free sodas, the list goes on and on), is the psychology of scarcity playing into homebuyers’ behavior? Is fear of loss driving buyers into the market, which is driving prices up unnaturally?’”

“There are signs that the current buying frenzy could be short-lived, Macaskill says. After all, housing inventory earlier this month was actually 10 percent above the same period last year, and ‘I am seeing an uptick in calls from sellers looking to sell while the market is peaking.’”

“Just as American Financing and the homeowners it helped found a way to better themselves amid a harrowing pandemic economy, another part of the mortgage industry fared much worse. The number of Coloradans who didn’t pay their mortgages in July spiked to near record levels, according to new data from the Mortgage Bankers Association. Hardest hit were Federal Housing Administration loans, which are designed for low- to moderate-income households. ‘The delinquency rate has risen, and the major reason for it is unemployment,’ said Marina Walsh, the MBA’s vice president of industry research. ‘If people don’t have jobs, they can’t make their mortgage payment.’”

“Matthew Leprino, a Realtor in Denver, said that two weeks ago, he put a client’s downtown loft on the market that a few months ago ‘would have sold in a heartbeat because of the demand.’ After a week, only one prospective buyer had looked at it. ‘I just had a conversation with my clients and said, ‘Hey guys, the demand isn’t there right now.’”

“A number of metros in seven states are under enhanced siege by a percolating number of FHA delinquencies, according the AEI.org. In July, 17% of FHA’s approximately eight million loans were delinquent, the FHA Neighborhood Watch, which consists of loans in forbearance, reported. Furthermore, also during the month, 10.5% of FHA’s approximately eight million loans were seriously delinquent.”

“In April, not only did the share of loans that became delinquent outpaced anything experienced during the Great Recession, it’s the highest rate on record in 21 years, according to CoreLogic’s data. During the month, 3.4% of mortgages went from current to 30 days past due–outpacing the 2% high recorded in late 2008.”

“In a year, the pandemic-induced recession could lead to massive foreclosures in Palm Beach County. The key issue that will affect mortgage foreclosures is the job market. Palm Beach County’s unemployment rate rose to 11.6% in July, up dramatically from 3.6% during the same month in 2019. ‘Judgment day is coming,’ said Gary Nagle, a Juno Beach lawyer and attorney for the Palm Beach Board of Realtors.”

“Most banks expect a banking crisis to hit in the fourth quarter of 2020, when it ‘hits the fan on the commercial side,’ said Peter Zalewski, director of acquisitions for Miami-based Brickell Ventures. ‘They’re calling it the Big Short 2.0.’ As far as houses are concerned, banks are readying to move ‘aggressively’ on the foreclosure process, an action that likely will prompt alarm among bank regulators, Zalewski said. With both commercial and residential mortgages in trouble, Zalewski said bankers could be hoping for another bank bailout, as was the case after the prior recession. ‘The lesson learned for the overall economy is once the residential goes bad, it snowballs,’ Zalewski said.”

“Prices in Manhattan ceased accelerating in late 2015; in Brooklyn it took a year or two longer. Since then, values had fallen between 10% and 20%. The COVID lockdown and its attendant ills added another 5% to 10% to those already substantial losses. Especially in the larger apartment market, many sellers want out. Many sellers, facing disappointing prospects regarding the sale of their house or apartment, don’t wish to commit funds to prepare it for sale. Whatever the issue, the price always sits at the root of the problem. The market is impartial; it delivers its verdict regardless of whether the news cheers or distresses the property owner. Every serious seller needs to listen.”

“A quarter (24.5%) of San Francisco-area home sellers cut their list prices during the four weeks ending Aug. 16, the highest share since at least 2015, when Redfin began recording this data. That’s more than double the rate from a year earlier, marking the largest annual increase in the share of active listings with price drops among the 50 most populous U.S. metro areas.”

“‘Buyers in San Francisco want fire-sale deals, and they’re not settling until they find them. They’re in no rush because there’s so much uncertainty right now—if the price isn’t right, they can just go rent a house in Lake Tahoe for a year until their employer gives concrete guidance on if or when they need to go back to the office,’ said local Redfin agent Carlos Barrientos. ‘I’m seeing a lot of buyers make lowball offers that initially get rejected, but then they get a call back from the sellers a few weeks later saying they’re willing to drop the price.’”

“A failed condominium development project in Toronto’s east end has laid bare a multimillion-dollar dispute between the sons of a former banker who fled charges of embezzlement and fraud in Iran and a family of Saudi Arabian investors. ‘What this community has ended up with is an empty lot full of grass, weeds and garbage, while these millionaires are fighting,’ said Councillor Paula Fletcher, who voted with Toronto council to approve the project’s rezoning. ‘It should never have happened,’ she said. ‘What the hell are these big money investors doing at this little corner in East York?’”

“The coronavirus pandemic is speeding up an exodus to Toronto’s suburbs and beyond. That exodus is putting pressure on Toronto’s once red-hot condo market at a time when a near-record number of units are under construction, hinting at a potential glut in the making. Two-thirds of the condo units being built in Toronto are pre-sold to investors. Condo investors, meanwhile, are getting skittish as the coronavirus pandemic has led to high unemployment, gutted the short-term rental market and sent long-term rents plunging.”

“‘There was always a concern that we were building too many small condos, but up until at least COVID-19, there was more demand for these smaller units than we could build,’ said Urbanation President Shaun Hildebrand. Active condo listings in the city of Toronto have tripled since February, with inventory at its highest point since 2015.”

“In markets like London and Dubai, prices were already trading at a discount across the board. ‘We’ve seen 20% off because of Brexit, and I think possibly 10% off post-Covid,’ said Martin Bikhit, managing director of Berkshire Hathaway HomeServices Kay & Company in London. ‘The market here is still very, very price sensitive. There’s clearly demand for single-family houses, but you have to price it correctly or you won’t get people to engage.’”

“Dubai has seen similar discounts driven by excess supply built in advance of the now-postponed Expo 2020, but newfound demand for villas in the last several months has slowed the price drops. ‘Prices have been adjusting for two or three years; I’d say about a 20% reduction,’ said Dounia Fadi, chief operating officer of Berkshire Hathaway HomeServices Gulf Properties.”

“Johor has the highest number of serviced apartment overhang units in Malaysia as of last year and the first quarter of 2020 (1Q 2020). Data showed the state recorded 32% of serviced apartment existing units in 2019 and 1Q 2020. Selangor came second with 29% in the same corresponding period, followed by Kuala Lumpur with 27%. Napic data showed there was a dramatic increase in serviced apartments in these areas in 2018, with extensive annual growth of 78.84%, compared to 2.2% growth of residential high-rise properties.”

“There were several factors which contributed to the problem of overhang, said the centre, including economic uncertainties, weak market sentiment and poor planning by developers. ‘However, the main issue of overhang could be traced to oversupply of houses that exceed the demand and supply factor as well as local market absorptivity,’ it stated.”

“The Reserve Bank of Australia is warning a 40 per cent fall in house prices is ‘plausible’ as coronavirus pushes up unemployment to 1990s levels. Even before the COVID-19 crisis, Australia already had the world’s highest household debt levels after Switzerland. A surge in unemployment to double-digit levels unseen since 1994, as a result of from coronavirus trading restrictions, is set to force struggling home borrowers to sell.”

“The paper overlooked how Australian wages growth had been stuck at below-average levels for the past seven years. Digital Finance Analytics principal Martin North, an economist, said house prices would likely to dive as struggling home borrowers who had lost their job were forced to sell – causing the property market to be flooded with distressed sales.”

“While the Reserve Bank has expressed concern about house prices, Mr North criticised the paper for downplaying the risk of high household debt levels – taking into account what borrowers owed on their mortgage, credit cards and personal loans. ‘It is all about spin. This is not going to magically sort itself out,’ he said. ‘We’re in the foothills of a crisis – the crisis is going to continue for two or three years, unemployment will rise.’”

“Don’t expect a pay raise or bonus. No color printing. Turn off the lights when leaving the office. Travel less. These are part of a 90-point directive the government of Heilongjiang in China’s far north-east gave its employees in May, as part of cutbacks to free up money to fight the coronavirus and support the economy. Officials were also instructed to cut spending on pens, paper, scissors and glue. Purchases of new official cars are forbidden.”

“The rustbelt province, plagued by an aging population and dim growth prospects, expects a fiscal shortfall of at least 20 billion yuan ($2.9 billion) in 2020, or about 16% of local revenue last year. The fiscal stress is ‘extremely prominent,’ the government said. Heilongjiang’s belt-tightening gives a glimpse of the predicament faced by local authorities across the country. The coronavirus has paralyzed the economy, hitting already shrinking tax revenue but increasing demands to spend on everything from payroll subsidies to consumption vouchers and virus control.”

“‘Local governments are financially squeezed at both ends,’ said Betty Wang, a senior economist at Australia and New Zealand Banking Group Ltd in Hong Kong. ‘The virus has affected economic growth and government income, while restoring the economy requires more spending.’”