A report from the Telegraph. “For some American homeowners, one number is the most important indicator of wealth in their life: the Zestimate. When they do not like what they see, things can turn ugly. ‘F— Zillow and their ‘zestimates’. This shouldn’t even be legal,’ one online commenter wrote after their home’s estimated value dropped by $70,000 (£52,400).”
“The Zestimate is so influential that some have even taken the Seattle-based company to court, claiming the calculations damage the sale value of their home. ‘It’s tempting to draw a parallel to WeWork,’ says Mike DelPrete, a property tech adviser, referring to the office space company that spectacularly imploded when its venture capital-fuelled hype was not matched by profits.”
“‘The question you’ve got to ask: is this a technology company, or a real estate company? You’re sitting on thousands of houses and, at the end of the day, this is real estate – there’s cracks in the foundation and painting that needs to be done,’ he said. ‘Technology can only take you so far and as the Zillow example shows, if technology fails, it can fail spectacularly.’”
The Orlando Business Journal in Florida. “Zillow Group Inc. plans to offload thousands of homes, including hundreds here on the First Coast. Since March, the Seattle-based company’s related firm Zillow Homes Property Trust bought about 440 homes in Duval County for a total of $137.7 million and has sold about 150 of them for around $46 million. It also bought 142 homes in St. Johns County, where it has sold 44. It’s latest purchases closed on Friday.”
“It’s difficult to make any broad assumptions about the housing market based on the collapse of Zillow’s homebuying business, PNC Financial Services Group Senior Economist Abbey Omondunbi told Orlando Business Journal. However, while the housing market is still strong, the situation is emblematic of the rapid home price gains seen in markets across the U.S., Omondunbi added. ‘It really speaks a lot about the frenetic pace of buying and selling we saw earlier this year, which has stabilized.’”
The Worcester Telegram in Massachusetts. “While the moratorium provided safety for tenants, it also affected landlords. Many owners, frustrated with non-compliant tenants and nonpayment of rent, sold out of the business, according to Doug Quattrochi, executive director at Massachusetts Landlords. ‘In August and September 2020, when the state moratorium was at its longest duration, we had landlords selling out of the business at two to three times the normal rate,’ Quattrochi said, noting the fall in membership renewals. ‘People (were) running out of money and there was no end in sight.’”
“Dave Branagan, a landlord with 20 years of experience, sold multiple properties due to the moratorium in mid-2020. His final property sale went through in August of this year and while Branagan still owns a couple of properties, he has separated himself from the business as much as possible. ‘I didn’t have problems with the ones who lost their jobs. I had problems with the ones that were opportunistic thieves,’ Branagan said. ‘I’m glad I’m out of the business, and I would never do it again.’”
From Socket Site in California. “The light-filled, one-bedroom cottage at 4353 17th Street, which sits above the Castro in Corona Heights and was purchased for $675,000 in January of 2014, re-sold for $915,000 in November of 2016, representing total appreciation of 35.6 percent over those 34 months for the 685-square-foot, free-standing home despite its various imperfections and the ‘short term hold.’”
“Having returned to the market priced at $998,000 in October of last year, the list price for 4353 17th Street was reduced to $930,000 after a month on the market and to $899,000 after two, a sale at which would have represented net appreciation of just 1.6 percent for the cottage since the fourth quarter of 2016 on an apples-to-apples basis.”
“Withdrawn from the MLS in January and then relisted anew for $899,000 this past May, the condo alternative cottage has just been re-listed anew anew, with a further reduced list price of $849,000, a sale at which would represent depreciation of 7.2 percent since the fourth quarter of 2016 on an apples-to-apples basis but would be considered to be ‘at asking,’ and with ‘only 3 days on the market’ as of this morning, at least according to all industry stats and aggregate market reports.”
From EGI Radius. “Houses in areas of the north of England and Scotland are worth less now than they were before the global financial crisis 13 years ago.”
From Nine News. “Peter White AM, managing director of the Finance Brokers Association of Australia (FBAA), said recent research conducted by McCrindle was a ‘wake-up call’ that many borrowers may be living beyond their means. Commissioned by the FBAA, the research showed 66 per cent of borrowers would be under pressure if interest rates were to rise and 57 per cent would not be able to make repayments if their mortgage were to increase by as little as $300 a month.”
“Among those who said they wouldn’t be able to afford repayments following a $300 monthly rise were households that earnt between $2000 and $3000 a week, proving that mortgage stress was not only looming for lower income earners.”
“‘Many Australians are clearly on the brink and are sleepwalking into disaster, living in the false hope that rates will stay this low,’ Mr White said. ‘This survey is a wake-up call and shows that even a small rise in rates – which is looking more likely next year with rising inflation – could be catastrophic for our nation.’”
“An industry veteran of more than 40 years, Mr White said it was possible that Australians had grown complacent after almost 11 years without seeing a rate rise. ‘The housing market has soared and there is a reasonable chance will undergo a correction, meaning that those with low deposits who have stretched themselves to make large repayments could see themselves with negative equity, owing more than the value of the property,’ Mr White said. ‘Add a mortgage increase they can’t pay, and there could be a lot of people in real trouble.’”
“Digital banking expert from Compare the Market David Ruddiman said the fear of missing out – dubbed FOMO – is a powerful motivator. ‘Buyers have been spooked by forecasts indicating that prices will continue to grow. In some ways they’re fulfilling the prophecy by making bigger offers than they usually would,’ Mr Ruddiman said. ‘The figures show the fear factor has been crucial in driving trends, with 63 per cent of respondents admitting they bought as quickly as possible to avoid surging prices.’”
From Bloomberg. “Beijing has good reasons to rein in the country’s property giants. They have accrued so much debt over the course of their breakneck expansion — $2.5 trillion among the top 50 or so listed companies. But developers also have served an important social purpose. In 1998, when China launched a program to encourage private home ownership, there was a severe shortage of apartments in urban areas, and what was available was often shabby. The government provided incentives, and the developers swooped in. At one point, China was adding about 15 housing units per 1,000 people, three times as many as in the US or Japan.”
“The developers’ plight has drawn international attention in part because offshore investors make up the bulk of their bondholders. For instance, with about $12 billion dollar bonds outstanding, Shenzhen-based Kaisa Group Holdings Ltd. is the second-largest high-yield issuer after Evergrande. Domestic bank loans, by comparison, account for only 27% on the books. Investors are clearly pricing in a default: Kaisa’s $400 million note due this December is now trading at only 43 cents on the dollar.”
“All companies risk failure, and China’s property sector badly overreached. But that isn’t a reason for Beijing to pressure companies out of existence, leaving investors holding the bag.”
The Bangkok Post. “The temporary revocation of lending curbs might be an encouragement for the home loan market and housing transfers next year, however, the high rate of mortgage rejections remains a concern due to weak purchasing power. Last month the Bank of Thailand eased LTV constraints to 100% for second and third home purchases, from an earlier cap of 70-90%. Weak local demand and shrinking purchasing power with high household debt are among the critical factors, as well as the fragile employment rate and declining wealth and household savings due to the long-term pandemic.”
“At the same time, the cumulative unsold supply remained large, resulting in high competition as many developers offer discount prices to drain their inventory, added Alongkot Boonmasuk, secretary-general of the Housing Finance Association. Some 39 provinces saw a contraction of 90% in housing transfers while there were six provinces that had a number of transferred houses totalling less than 10 units.”
“Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the residential market has been sluggish since 2019. ‘All figures related to the housing market were negative across the board,’ he said. ‘They were below a five-year average of the period between 2015 and 2019.’”
“Despite the easing of lending curbs, Pornarit Chounchaisit, president of the Thai Real Estate Association, remained concerned about mortgage loan rejection which was at a high rate. ‘In some provinces, the rejection rate hit 70%,’ he said. ‘Though the average was 30%, the mass market with units priced 2-3 million baht saw a rejection rate of 50-60% due largely to financial institutions’ stricter rules.’”
“Mr Alongkot said there were six reasons why the mortgage loan application was rejected: a default history due to financial indiscipline, insufficient income, debt overload, incomplete documents and unclear sources of income and co-borrower problems. ‘The most important is that homebuyers have no savings,’ said Mr Alongkot.”