A report from NPR. “As home prices nationwide have gone up dramatically since the start of the pandemic, the amount of equity that people have in their homes is rising, and many homeowners want to access that increased value. But for people with bad credit or low incomes, loans are often inaccessible. EasyKnock, as well as other companies with similar products, offer sale-leaseback deals as an alternative that doesn’t have to follow the regulations that apply to lenders. Lester Shreffler retired this June, but it’s a stretch. His house was integral to his retirement plan. He intended to pay off the mortgage by the time he left his job, so he could sell the house and use the equity to purchase the marina. It has been about four years since Shreffler, a single father, last lived in the house in Hurst, Texas, northeast of Fort Worth. ‘I was always counting on that income from a house sale. That’s why people buy houses. For retirement. It just didn’t work out that way with this deal,’ he said.”
From El Pais. When Mohammed Syed bought his 3,600-square-foot home in Pinecrest, Miami-Dade County, Florida, in 2017, he didn’t realize it was located in a flood zone. Until then, he had lived 10 minutes from his new residence and had never considered whether it was on land that was above or below the sea level. In a short time, he came face to face with reality. The mortgage required him to take out a flood insurance policy. ‘Now I have to pay $4,000 a year in insurance for that,’ Syed laments. The problem is that he has to pay for two other policies: one to cover the risk of wind damage and a general one for the home, which raised his home insurance budget last year to $16,000. That amount is double what he paid when you bought the home in 2017, but less than what you will pay this year. This week he was notified that the general home insurance premium has risen from $6,791 to $8,198. ‘Insurance is so out of control that people are leaving,’ he says.”
From USA Today. “Michelle Gradnigo is a homeowner in the fire-scarred foothill town of Paradise north of Sacramento. In 2018, the Camp Fire − the deadliest wildfire in California history − destroyed more than 90% of the homes there. Her annual tab for homeowner’s insurance was already high – $3,531 a year – but she budgeted for it. Then in January she got her renewal in the mail. Her premium jumped 500% to $19,310. Her monthly mortgage payment doubled overnight to $8,000. She had to pull money out of her retirement account and take on credit card debt for a couple of months just to make the higher payments.”
“Now she says she feels stuck. With runaway premiums and insurance companies dropping coverage for homeowners in high-risk areas, she has watched neighbors slash the asking price to sell their homes. ‘If I put this house on the market and it really doesn’t sell, I will know that I have nowhere to go,’ Gradnigo said. ‘It’s despair here. No one is helping us and no one is talking about it.’ Her out-of-pocket expense is now about $12,000 a year, three times what she used to pay. In addition to the higher bill, she says she no longer has the feeling of safety she once had. ‘I know it’s just an insurance company. But when you’ve grown up believing your insurance agents are the people you can trust and hearing the commercials and the jingles and then they just do that to you …’ she said, trailing off.”
Ahwatukee Foothills News in Arizona. “Phoenix Realtors said new listings continued to climb across the Valley in May. Homes for sale in the first five months of this year 17% over the same period of 2023. The two Ahwatukee ZIP codes tracked similarly in inventory growth but 85044 homes stayed on the market longer. There were 64 homes for sale last month in 85044 – a 120% increase over the previous May – and 77 sale homes in 85048 – nearly 114% above May 2023, according to Phoenix Realtors. Pending sales dropped in both Ahwatukee ZIP codes as well. In 85044, the 21 pending sales dropped 54% below the May 2023 number while the 15 pending sales in 85048 represented a 46% drop from the previous May.”
“The Cromford Report, one of the Valley housing market’s leading analysts, said, ‘Buyer enthusiasm for re-sale homes is still very low indeed.’ he Cromford Report also said last week that conditions in most of the Valley’s 17 submarkets were quickly turning in favor of buyers and that ‘price reductions are again increasing in both size and frequency.’”
The Texas Tribune. “More Texas homeowners and renters than ever are struggling with high housing costs, according to a new report from Harvard University’s Joint Center for Housing Studies. Still, in some parts of the state, the cost of housing is on the decline. Home prices in Austin, where the typical home fetched more than half a million dollars at the height of the state’s pandemic-era housing market, have fallen for 16 straight months, according to Zillow data. San Antonio has also seen months’ long decline in home prices. ‘Buyers are still very much contending with elevated home prices, and of course, mortgage rates,’ said Clare Knapp, housing economist for the Austin Board of Realtors. ‘But with that uptick in active listings, they do have more negotiating power.’”
“Asking rents have fallen over the last year in the Austin, Dallas-Fort Worth, Houston and San Antonio regions, figures from the firm MRI ApartmentData show, as new apartments open their doors and force existing landlords to compete to keep new tenants.”
The Real Deal. “New Jersey title insurance company Riverside Abstract is linked to yet another deal involving mortgage fraud, this time in Eureka, Illinois. Riverside Abstract, one of the largest title insurers in the tri-state area, has faced scrutiny from Fannie Mae and Freddie Mac for its involvement in a deal in which the Department of Justice alleges the owner committed fraud. Fannie Mae has halted closing loans involving Riverside. The Department of Justice previously alleged Riverside provided a real closing and fake closing for an office complex in Troy, Michigan. The agency alleged that the owners, Boruch Drillman and Aron Puretz, used the fake closing to obtain a larger loan than they otherwise would have been able to receive.”
“Now, the Department of Justice alleges Riverside provided the closings for another fraudulent multifamily deal, in Eureka. The Illinois deal involved a similar illegal flip in which Riverside allegedly provided a real closing and a fake one. Riverside has not been charged with wrongdoing. Puretz recently pleaded guilty for his role in a $55 million mortgage scheme. Puretz also hid his ownership interests in the property because he knew he would not have secured a loan had his stake been disclosed, according to federal prosecutors. Puretz faces up to five years in jail.”
The Boston Globe in Massachusetts. “Boston enjoys an outsize reputation thanks to its rich history, elite universities and hospitals, life-saving biotechs, and storied sports teams. (Celtics!) We are not, however, exceptional. Not the ‘Hub of the Universe.’ Not even the hub of the Northeast Corridor. So let’s put aside the fanciful notion — particularly popular among fiscal progressives — that Boston’s many strengths and charms ensure we will remain economically competitive. I wrote last week that our paramount progressive, Mayor Michelle Wu, says that Boston’s business districts have held up better than those in other cities. Call it the ‘At Least We’re Not San Francisco Syndrome.’ It’s unhelpfully optimistic. San Fran is certainly an outlier. The value of its office real estate tumbled nearly 60 percent from the end of 2019 to the end of 2022, according to estimates in a 2023 academic research paper. But the average drop for the 20 largest US office markets was a painful 47 percent.”
The Ottawa Citizen in Canada. “Ashcroft Homes has defaulted on a $6.5-million loan, sending three of its Richmond Road condominium properties into receivership. Tenants of the three properties were issued letters earlier this week indicating that their landlord had gone into receivership. The letter, from the receiver BDO Canada Ltd., came with a court order attached. Earlier this month, Ashcroft made headlines when it was revealed the company was suing the City of Ottawa for $30 million for failing to build stormwater sewers in its new Eastboro development in Orléans. Buyers have been waiting more than a year to move into completed homes in the development as Ashcroft and the city have fought over who should pay for the sewers.”
CBC News in Canada. “A husband-and-wife law firm in Toronto has been shut down, lenders have moved to seize their family homes, and they’re facing 15 lawsuits and a police investigation after millions of dollars in client money went missing from the firm’s trust accounts. The saga of Nicholas Cartel and his wife, Singa Bui, has plenty of twists and turns, not the least of which is what happened to the huge sums of money allegedly embezzled from Cartel & Bui LLP. But it also reveals a part of the homebuying process that’s vulnerable to financial manipulation but isn’t closely scrutinized, and the inadequacy of the compensation for homebuyers or sellers who do fall victim.”
“One of the plaintiffs, Anthony Ingarra, a Toronto-area mortgage agent whose family says it lost more than $310,000 in their dealings with Cartel & Bui, said the experience has shaken him. ‘I’m almost afraid now to make another real estate transaction,’ he said. ‘The general public needs to know that their money isn’t safe in a lawyer’s trust account.’ Starting in September, in a half-dozen southern Ontario home sales — from Milton to Cobourg — handled by Cartel & Bui, the law firm didn’t pay off the sellers’ mortgages as it was supposed to do, according to lawsuits by seven homebuyers. It took the buyers’ money, paid out the home equity to its client sellers, but held on to the rest, the buyers allege.”
“When Cartel argued he shouldn’t be found in civil contempt because his wife handled all their business and family finances, the judge pointedly summed up the matter. ‘Six million dollars goes missing. Goes into her account. Did she pay for nice gifts for you? Did you buy a car that she paid for? Did she pay mortgage payments? How can you not know, when you’re living with her and you’ve got a home together and you’ve got children together, where $6 million went?’”
Interest New Zealand. “At the time I wrote my previews for 2024 (in late November), it was in the belief that we had managed to completely avoid a recession last year. How wrong that was. House prices are going backwards again, with the median price falling 2.5% in May, according to the Real Estate Institute of NZ (REINZ), and dropping 1.2% after seasonal adjustment. And there’s a glut of available houses. The house price news will hurt. I don’t think you can overstate how much of a psychological impact the housing market has on Kiwis. We are hugely invested in the housing market both financially and emotionally. When house prices go up, the mood of the nation goes up. When they go down, or are even just in the doldrums, the mood goes down. And I think that’s about where we are now as we get to the halfway point in the year. House prices starting to fall again are the over-ripe cherry on top of an increasingly soggy cake.”
“New Zealanders are a phlegmatic bunch, who mind their own business and get on with things. It was never going to be apparent on the face of things when savings buffers were starting to run out and when the leeway that had been established on the mortgage payments was starting to be used up. Until suddenly. Here we go. And once the struggles start to become apparent, this mood becomes contagious. People who don’t have a mortgage and to all intents and purposes are doing ‘fine’ suddenly decide they too should stop spending money, well, because, it’s grim out there. Better save. And the economy grinds to a halt. Halfway through 2024, this is where we appear to be – in grimace-and bear-it mode.”
Yahoo Finance. “A young Aussie worker has opened up about the difficulties and sacrifices she has endured after buying her first home in her mid-20s. So many people around the country are desperate to get their foot onto the property ladder and Danielle Anstey managed to achieve that feat last year. She and her partner bought a property in Melbourne that was too good to pass up and while she doesn’t regret their decision, she admits it’s been ‘pretty intense’ since they got the keys. The 26-year-old told Yahoo Finance homeownership is fantastic because it’s an appreciating asset, but that doesn’t mean it doesn’t come with tough downsides.”
“‘The first six months were extremely hard,’ she said. ‘We were used to renting and having a bit more of our income that we could play around with. Now, pretty much the majority of our wage goes to the mortgage, so we’ve really had to sacrifice a lot.’ She said if it wasn’t for her partner’s parents living close by and the odd free dinner here and there thanks to her side hustle of content creation, there wouldn’t be ‘any joy in life.’”
“The 26-year-old, who works in marketing, told Yahoo Finance it’s difficult watching her friends and loved ones around the same age enjoy their 20s. It’s particularly frustrating at the moment as Aussies head over to Europe to enjoy a few weeks or months off, while Anstey and her partner endure a Melbourne winter and are forced to save every cent. ‘Seeing everyone be able to jet off and kind of escape reality for a couple of months of the year is extremely hard,’ she said. ‘Especially when you work all year long. And you know that every step you make is just going to the house you don’t really get a chance to enjoy the money that you’ve made. People don’t understand how hard it is right now and the Boomers are still saying, ‘You need to stop complaining, stop whinging, make some sacrifices,’ she said. ‘But the sacrifice is our entire wage.’”
“‘The worst thing is, at the moment, we’re only paying off interest,’ she explained to Yahoo Finance. ‘Our home loan in the last year has only gone down I think maybe like $3,000 out of the tens of thousands of dollars that have been paid towards it. Our home loan is essentially the same as what we paid for it. It hasn’t gone down.’”
“Reading this might make anyone rip up their home loan application and run for the hills. But Anstey said in the year that she’s owned her property, it’s already gone up $100,000 in value from the purchase price. ‘I really want to travel but the equity on our house already has just spoken major volumes to me that I’ve made the right decision,’ she said. ‘And in a couple of years, I could potentially use the equity to buy an investment property. I would have loved to have been able to not use every single cent of my savings or not use up every single cent that the bank had given me. But like that’s just the reality of it. If I didn’t do that, I would never be able to purchase a home.’”