It’s Friday desk clearing time for this blogger. “Until recently, experts haven’t widely supported the possibility of a housing bubble about to burst, especially in states like Utah. Dejan Eskic, at the University of Utah told the Deseret News on Thursday that Utahns shouldn’t panic or jump to hasty conclusions from the new report. ‘For prices to really crash,’ Eskic said, ‘you need some black swan economic frenzy event and people can’t make their monthly payments.’”
“Purchase mortgage applications are down an astounding 40% from a year ago, according to the Mortgage Bankers Association. ‘We are at a turning point in the market. Offer activity is slowing,’ said Patrick Veling, CEO of Real Data Strategies. ‘Homebuyers, especially in the $1.1 million to $1.4 million price range, are saying we’re mad as hell and we’re not going to take it anymore.’”
“Supply is up in the Inland Empire, rising 31% in San Bernardino County and 4% in Riverside County. Could we soon see 5% fixed rates? We’re not far off. If the exotic mortgage market is any indication, we are going to hit 5% and then some in the conventional mortgage market. The outside-the-box, so-called non-qualified mortgages are already north of 6% for a 30-year fixed. Yikes.”
“Mortgage rates are shooting up at the fastest pace in history, sending the typical monthly mortgage payment for a homebuyer up more than $500 since the beginning of this year. As of this month, Redfin has started receiving fewer requests than a year ago for agents’ service in pricey coastal markets including Seattle, San Diego, Boston and Washington, D.C. Declines in searches, touring, and mortgage applications are larger in California than elsewhere. ‘I’m starting to see early signs that the housing market is letting off some steam—something I wouldn’t have said a month ago,’ said Aaron McCarty, a Redfin real estate agent in the Bay Area. ‘A house that might’ve gone for $700,000 over the list price two months ago may now go for $300,000 or $400,000 over.’”
“Demand for second homes in the U.S. is plummeting as mortgage rates climb steeply. Contracts to buy previously owned homes declined for a fourth straight month in February as the inventory shortage restricted deals, the National Association of Realtors said last week. Would-be buyers of vacation homes face another potential obstacle: a fee increase ranging from an additional 1% to 4% on second-home loans backed by Fannie Mae or Freddie Mac. That could tack on as much as $12,000 to a $300,000 mortgage, payable upfront or rolled into the loan.”
“While the increase officially doesn’t take effect until April 1, the fees have been priced into loans for almost a month, so that may have deterred some buyers already, according to Rebecca Richardson, a broker at Wyndham Capital Mortgage in Charlotte, North Carolina. Combined with rising rates, the fee increase ‘has definitely dampened the enthusiasm’ among her clients, Richardson said. ‘It’s becoming a much weightier decision versus last year.’”
“BMO senior economist Robert Kavcic wrote in a note to clients that ‘there is now a full-scale attack on Canadian home prices across various levels of policy.’ He cited marked expectations of surging interest rates in the months ahead and new or higher taxes on real estate speculators and non-resident buyers in some provinces as the biggest factors that could see home prices take a hit in the year ahead. ‘They’re an inflation-targeting central bank and their first job is to get inflation back down into that one three per cent range. And if lower house prices are a byproduct of that, they’re going to have to just let it go.’”
“Sydney vendors are asking less for their properties as news of the downturn begins to hit home. It represents a pivotal moment in Sydney’s ‘softening market,’ said SQM managing director Louis Christopher. ‘Vendors hate reducing their asking prices,’ Mr Christopher said, explaining that it usually takes three to four months of decline before home sellers lower their expectations. ‘You’ll literally see, as what we have seen in our data, vendors continue to try and lift their asking prices. Then finally, they get it that the market has slowed and they’ve heard it from more than one source. They’re not moving their property and they’re finally willing to ask less.’”
“There are signs of a housing market slowdown, with CoreLogic data showing median house values have fallen in 150 out of 900 suburbs around the country in the last three months. After a two-year search, first home buyers Stephen Pipe and his wife have managed to buy a house in Bombay – on the cusp of Auckland. ‘We continually felt like every time we made an offer and it wasn’t accepted, something better came up and I feel like that’s the trend that we’re getting into now. We are truly getting into a buyers’ market. Sellers are actually starting to get a little bit more desperate, all of a sudden they’re realising, damn, I kind of missed the boat.’”
“‘Work hard when young or enjoy no reputation later in life.’ So goes a famous saying from China’s Fujian province. Ou Zongrong stood by it, building a property empire with its roots in the province. At first, things worked out well. Now the tide has turned. In February, Ou’s Zhenro Properties Group Ltd. spooked investors by saying it may not have cash to redeem a perpetual note, just weeks after promising it would. In fact, it said it may not have enough liquidity to repay other near-term maturities.”
“That was a shock for investors in a developer that had been weathering China’s massive real estate crisis relatively well, never missing a public debt payment until then. ‘Fujian-based developers such as Ronshine, Yuzhou, Zhenro have been aggressively funding land acquisitions with debts,’ said Dan Wang, a credit analyst at Bloomberg Intelligence. ‘This has left them vulnerable in a property market downturn and in a scenario where capital markets shut down.’”
“The slump has cost the Fujian bosses billions. Shimao’s Hui Wing Mau, Zhenro’s Ou and Lin Zhong of CIFI have all seen their fortunes slump. Ou is no longer a billionaire, according to the Bloomberg Billionaires Index.”