A weekend topic starting with Quartz. “The press has noted that more than 6 million homes may be sold this year, more than any time since 2006. For those familiar with real estate busts, this may be an ominous sign. Economists argue his time is different. Tight supply and rising demand—not lax lending standards—are driving the current boom. Jeff Taylor, a former board member at the Mortgage Bankers Association, says that loan products and underwriting guidelines no longer allow for borrowers to take as much risk. ‘There is a lot of skin in the game and ability to repay is a large consideration,’ he says.”
The Globe and Mail in Canada. “The real estate frenzy on both sides of the border has been one of the more peculiar side effects of the pandemic and its accompanying economic shock. Mass fiscal stimulus meant that, for many households, finances actually improved. And crisis-level interest rates made mortgages as cheap as they get. By the summer of 2020, the rising tide in housing elevated virtually everything even peripherally connected to real estate.”
“Starting from the time the stock market bottomed out in March, 2020, Real Matters shares more than tripled over roughly the next five months. Around that time, the company said one of its biggest constraints to growth was U.S. lenders couldn’t get money out the door quickly enough.”
The Sun News. “Property values in northeast Indiana have been rising rapidly in recent years, with assessments for homes and land jumping far beyond typical year-to-year increases. ‘We have a lot more offers on homes when they go on the market, where it becomes a bidding war,’ said Kendallville-based Hosler Realty co-owner Jennifer Streich. ‘You have buyers that are willing to forego their inspections and even writing in that they’re willing to pay over appraisal value. Without needing the checks and balances, that increases the issues with houses selling for more.’”
“‘When someone’s desperate for a house, they’re willing to do that,’ Streich said.”
From WFLX on South Florida. “In 2007, John and Ria Parlante took a break from the fluctuating climate in New York for more favorable weather and real estate investments. ‘It’s hard to pull the trigger on something that you could have bought many years ago for a third of the price,’ Ria Parlante said. ‘We recently bought (property) as little as about two weeks ago and we ended up paying almost $1.5 million for a similar property that almost eight years ago you could have got for $500,000 to $600,000,’ added John Parlante.”
The Montana Free Press. “Home prices have spiked in Whitefish. In October 2019, the median sales price in Whitefish was $410,000. Two years later, in October 2021, it had jumped to $782,000. Similar price spikes are being seen across the Flathead Valley, including in Kalispell and Columbia Falls, places that have long been regarded as affordable alternatives to Whitefish.”
“Another issue is the proliferation of short-term rentals. In 2014, there were just 31 short-term rentals in the 59937 zip code, which includes all of Whitefish. Now there are more than 1,000, according to AirDNA.”
The Gilbert Sun News in Arizona. “With active listing counts down by 7 percent in Gilbert year over year, Zillow reporting much of its inventory from their failed iBuying program going to large market investors who intend to keep the properties as rentals. Prices rising more than 27 percent year over year is difficult to swallow. While inventory is low, we are watching things like increasing interest rates, lack of affordability, potential for slower population growth or household formation and the max conventional loan limit increasing for the sixth year in a row to $625,000 for conventional financing.”
From Colorado Biz Magazine. “As home prices spiraled ever upward in Denver and every other city on the Front Range, many homebuyers looked east. They found bang for their buck along with elbow room to spare in communities like Bennett, Limon and Fort Morgan. ‘It’s been crazy,’ says Timothy Andersen, broker-owner at Gordon Real Estate Group in Limon, 90 miles southeast of Denver via I-70. ‘We’re seeing it not only in Limon, but we’re also seeing it in Fort Morgan, Wiggins, as far northeast as Sterling. It’s a 100- to 150-mile radius from Denver, mainly to the east and northeast.’”
“Sterling, for the record, is 126 miles northeast of Denver, meaning commuters would spend about four hours driving to and from work.”
The Petoskey News Review. “We are experiencing a hot real estate market in Northern Michigan and home prices are on the rise. In some areas of the country, however, the sale prices are just crazy. Here are some eye-popping numbers for you — California’s median price (half the prices above, half below) of a single home residence is $827,940, up 17 percent from last year. In LA County, it’s $830,700 and in San Francisco, $1.85 million. Yeah, $1.85 million.”
“So Californians are flocking to the ‘Inland Empire,’ a 27,000-square-mile swatch of land running from the LA County line to Nevada and Arizona. Median home price – a measly $570,000. Austin, Texas, is at $588,000 median price. The price is up 35 percent from last year, compared to Boise, Idaho, at 46 percent, Phoenix at 36, Salt Lake City at 33 and Sacramento at 28.”
“Do I know workers who live inside the city limits of Harbor? Sure — and they all bought or built their homes long, long ago before Harbor was ‘discovered’ by those with money burning a hole in their pocket. Petoskey is headed that way, with listings deep into six figures and some topping $1 million. Housing stock below $200,000 is a pipe dream.”
From Domain News in Australia. “How did Melbourne’s housing market become Millionaire’s Row? Across Victoria, 29 per cent of all suburbs now have a median house price of at least $1 million, and Melbourne’s median house price is almost $1.038 million, Domain data shows. Marshall White’s Marcus Chiminello has been in the industry for 20 years, but said the days of buying a mansion for $1 million were before his time.”
“By the early 2000s, $1 million would have bought ‘quite a nice home’ in parts of Camberwell or Glen Iris. ‘I’m selling homes today for $10 million, or $15 million or $20 million that even 20 years ago were selling for one, two or three million,’ he said. ‘Five, six years ago if you had $10 million to $15 million to spend in Toorak, you had an expectation you were getting a tennis court home. Today, under $20 million, it doesn’t exist.’”
The Globe and Mail in Canada. “Housing is hot – again. Across the country, in cities big and small, prices are surging after a summer lull. Here are some numbers that document what’s happening. The average price Yukon price was $542,515 last month, up almost $86,000 from $456,771 in the same month in 2020. Could this be British Columbia’s rising price trend spreading north?”
The Conversation Canada. “A chorus of voices perpetuate the argument that the primary cause of skyrocketing house prices is lack of supply. This ‘lack of supply’ view draws on basic Economics 101 textbooks, where using the example of widgets and a simple supply and demand curve, an increase in supply causes a reduction in price. Nationally between 2006 and 2016, Canada added 1.636 million households and built 1.919 million new homes. So, on average, almost 30,000 extra homes were constructed each year compared to the increase in the number of households.”
“In Vancouver, new construction exceeded household growth by 19 per cent. In Toronto it was one per cent, and Ottawa fell short of household growth by four per cent. So, in theory, between 2006 and 2016, we should have seen the greatest price growth in Ottawa and less price pressure in Vancouver. But prices increased by 93 per cent and 96 per cent in Vancouver and Toronto respectively, but by only 47 per cent in Ottawa.”
“Expanded supply will do nothing to stall or slow price growth, especially given the demand from buyers with accumulated wealth seeking properties in these locations. More supply, therefore, doesn’t mean lower prices.”
From Punch. “At the moment, several distressed Nigerians have retreated to the confines of their homes to lick their wounds after investing billions of naira in fraudulent financial schemes advertised with promises of bogus interest rates. Fronting physical offices with handy staff members and brandishing certificates engraved with logos of relevant regulatory agencies to appear legitimate, the promoters of the schemes have over the years, lured Nigerians with promises of unrealistic RoI.”
“As usual, an exhilarating high is almost always followed by a steep fall for those who fall prey, as they end up losing everything. Operators of these schemes thrive on people’s trust and greed to strip them of their life savings or retirement benefits as retirees have more often than not fallen victim to their dubious ploy. Victims are plunged into perpetual poverty, while those that borrowed to key into what they are brainwashed to believe are once in a lifetime, larger than life business opportunities, become indebted.”
“Ponzi schemes have continued to spread across nations, especially in developing countries with low per capita income like Nigeria, where the poverty and unemployment rates are high. As time passed and with people becoming aware of the antics of the operators, ingenuity went into play and others crept up under the guise of real estate, agriculture, medicine and tech, among others.”
“Social critics and financial analysts have averred that the alarming proliferation of fraudulent investment platforms in recent times and the scramble to key into them were invariably linked to greed, which is most times fuelled by unemployment and poverty. According to th Chairman, Health Assur Limited, Abimbade Adeshina, technically, people who invest in unregistered schemes with unrealistic RoI are driven b greed. ‘Those going into it do so due to greed. When you meet your waterloo, you are on your own,’ the stockbroker added.”
“Obiora Okoro, a retiree and victim of Sam Afolabi’s Eatrich Farms scheme, said he invested due to the desire to make good money effortlessly, SEC and CBN cannot be absolved of the blame. ‘They allowed these scammers to operate and wreak lives. They have an oversight function to perform by ensuring proper monitoring of investment schemes and money managers. Losing one million naira out of my retirement benefit has drained me of the will to live,’ he lamented.”