A report from Yahoo Finance. “DLB Financial Services CEO Debbie Boyd joins Yahoo Finance. ‘I’m a mortgage broker by trade. So I do believe the Fed is going to raise rates. We’ve already seen almost a point raise since the end of December…This is the new normal. And what I think people need to figure out is that, things aren’t going back down. You know, we’re very happy that our homes have gained all this equity in the last year. And that means that property taxes are going up. That also means that interest rates can handle it. There is a demand. So we have to quit thinking this is a bubble, and just start thinking that this is it now. This is the real thing.’”
The Orlando Sentinel. “Wekiva Hunt Club makes for a decent snapshot of the hot Central Florida housing market. Home values are skyrocketing. And more properties are going to major investment firms with their origins in Wall Street or Silicon Valley. ‘These guys are doing something new,’ said Elora Raymond, a professor of city planning at Georgia Tech. ‘To get jump-started, they needed the bargain-basement prices of the foreclosure crisis. But now that they have the competitive advantage of being able to manage these using digital technologies and cheap financing, they don’t need prices to be really low.’”
“Homes purchased by iBuyers are typically returned to the market relatively quickly, often near the price for which they bought it. Opendoor purchased a house in Wekiva in July for $336,700, and sold the house in December for $340,000, according to property appraiser records. Zillow, which has announced it is ending its homebuying arm and is in the process of selling off the rest of its inventory, took a $10,000 hit on a property they bought in Wekiva last year.”
The Mercury News in California. “A big residential development that would have brought more than 800 affordable homes to downtown San Jose has been seized through the foreclosure of its delinquent loan. The project, located at 199 Bassett St. in San Jose’s up-and-coming North San Pedro neighborhood, was slated to produce 803 affordable co-living residences. Now, however, the future has turned murky for the downtown San Jose housing project.”
“In June, Starcity was taken over by a rival co-living firm, New York City-based Common. The acquisition, however, didn’t include the Starcity projects in San Francisco or the downtown San Jose parcel. The plan at the time was to find a buyer for the San Jose and San Francisco properties, but none has emerged. For the downtown San Jose site, a brief auction was conducted on Monday but no buyers emerged to bid on the 199 Bassett site.”
From Socket Site in California. “Purchased for $2,424,000 in June of 2019, the stunning 2,200-square-foot live/work loft #102 at 355 Bryant Street returned to the market listed for $2,250,000 million last year after a ‘Luxury Live Auction!’ failed to produce an acceptable offer in 2020. Subsequently reduced to $2,195,000 million, the sale of the high-end condo has now closed escrow with a contract price of $2,212,500, which is officially ‘over asking’ according to all industry stats and aggregate reports but 8.8 percent ($212,500) under its 2019 value on an apples-to-apples basis.”
The Swindon Advertiser in the UK. “The construction company working on Nationwide’s £50 million eco-friendly housing development is going into administration. The Swindon-based building society appointed Mi-space as the main contractor for the 239-home estate in February 2020 and work was well underway when the scheme suffered a major setback. Work has stalled on the project as sub-contractors are uncertain about what will happen if Mi-space folds. Its parent company Midas intends to appoint an administrator within the next week unless it can find an alternative financial solution to its problems first.”
From Stuff New Zealand. “Tough new lending rules are bad law, but they come at a time when the ‘unsustainable’ growth in home lending needs to slow, one economist says. Independent economist Cameron Bagrie said while the CCCFA was bad law which went off the deep end, the huge growth in home lending in recent years was a bigger problem that needed to be addressed.”
“Total home lending increased by $33 billion, or $2.5b per month, over the last 12 months, he said. It equated to an 11 per cent rise in housing debt, while income growth had been about 6 per cent. ‘That level of growth in home loans is abnormal especially when mortgage rates are rising. It is unsustainable, and it needs to be stepped down. But there is nothing like restricting access to credit to buy houses to provoke an uproar. Access has got tighter as an unintended consequence of the CCCFA, and now all hell has broken loose.’”
The Viet Reader. “Economist Le Xuan Nghia told The Hanoi Times of the prospects and challenges for the real estate market in 2022 and subsequent years. ‘In Vietnam at the moment, there remains a shortage of housing supplies, mainly due to speculative investment. This makes those with real demand for housing unable to find options at affordable prices, as prices continue to rise against their true values. Speculative investments are causing a waste of land resources and the growing number of vacant residential areas.’”
“‘Vietnam’s solid macro-fundamentals in 2020 continue to be a strong foundation for the development of the real estate market. The remaining issue would be the imbalance of the supply-demand when demand is significantly higher. In this context, the domination of speculative investments would lead to rising prices and the risk of price bubbles. Just over the past few months, land prices in Hanoi went up by 2.5-3 folds, which is a sign of a price bubble.’”
The South China Morning Post. “China’s biggest property developers are still struggling to sell homes, as a resurgent Covid-19 pandemic combined with a slowing economy to deter big-ticket investments, offering little respite to the most leveraged among them. ‘Diminishing home sales will deteriorate the situation further for the developers as it dries up their funding channels. They can neither make more money from selling properties nor borrow money from issuing bonds or get loans,’ said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institute.”
From Bloomberg. “For a year and a half, Chinese authorities have been trying to reduce property prices, leverage, and the economy’s dependence on the real estate industry. The question is whether authorities are still in command. Having been pushed off the cliff, are China’s property investors, like Wile E. Coyote, just starting to look down?”
“By any standards, China’s property bubble looks epic. Home prices in major cities such as Beijing, Shanghai, and Shenzhen are more than 30 times average annual incomes. That compares with ratios closer to 10 in leading global centers such as London and New York, where valuations already look stretched after more than a decade of near-zero interest rates. Rental yields in China are tiny, at less than 2%.”
“Overbuilding has been endemic: The country had about 65 million empty units as of 2017. The property industry, meanwhile, sucks up huge amounts of debt capital: about 27% of loans in the local currency as of September (down from a 2019 peak of 29%), according to People’s Bank of China data. Other estimates suggest the true share of property-related loans may be much higher.”
“The dilemma for the government—and for investors in Chinese assets—is whether this mechanism, once set in motion, can be controlled or finessed. In a speculative market, ‘it is almost impossible to stabilize prices,’ as Michael Pettis, a professor of finance at Peking University, observed last year in considering the proposed introduction of a property tax. ‘Once prices stop going up, they must go down.’”
“What sustains property more than anything else is the belief that the industry’s growth and importance is supported by official policy, which has ensured decades of steadily rising prices. Take that away, and there may be nothing holding up Chinese real estate but air. Yet this is exactly what authorities have done. To cut the umbilical link between debt, construction activity, speculation, and economic growth, officials have gone out of their way to signal that the long property boom is over.”