It’s Friday desk clearing time for this blogger. “Mortgage rates are at the highest level since before the pandemic. ‘I would say right now, don’t buy into the fear that rates are going up, and this is the end of the real estate market,’ said Ryan Larussa with GMFS Mortgage.”
“According to Boise Regional Realtors, more homes were on the market in December 2021 than in previous months, but housing supply is still far outpaced by demand. However, Boise Regional Realtors noted that house sales appear to be slowing down in Ada County — and more homes are now on the market. At the end of December, there were 582 homes available, over 75% more than in December 2020. ‘Much to the relief of buyers, we saw more normal market times and increases in inventory in the last few months of 2021,’ said Boise Regional Realtors President Becky Enrico Crum.”
“After all but closing down this fall after running out of product, some builders — but not all — are starting to reopen their operations, according to John Burns Real Estate Consulting. In a recent survey, a Dallas builder told the firm they have a ‘huge number of communities coming online’ soon. In Naples, Florida, a builder who had been sold out is taking reservations again; ditto for a builder in Chicago. In the D.C. area, another builder is no longer operating with sales caps.”
“Meanwhile, housing starts reached a 1.68 million annual rate in November, the most houses under construction in a single month since 1974. Yet a record 152,000 houses have been permitted but not yet started — that’s more than double the normal level.”
“William Scott Thomas is a small-time landlord who owns three Syracuse rental properties. He is currently unemployed, so rents are his only income. Several of his tenants did not pay rent during the pandemic, he said. He was able to get some rental assistance, but not enough to cover his losses. Thomas has had enough. ‘I don’t want to deal with this anymore, being a landlord,’ Thomas said.”
“He said he had five tenants owe him a total of about $23,000. He was able to recover about $17,000 of it through the rental assistance program, but he’s out the rest, and he’d already fallen behind on bills while he was waiting for the money he did get. He’s currently unemployed and fell behind on his home’s mortgage. He had some financial protections because of the pandemic, he said. But those have ended. ‘Now that it’s over, and I still have tenants not paying me, I still have interest, risk of foreclosure, late fees,’ Thomas said.”
“Being a landlord was Joseph Esposito’s retirement account. The self-employed contractor owned three Syracuse rental properties at the beginning of the pandemic. But the 61-year-old’s nest egg began to fall apart with the eviction moratorium, he said. Two tenants stopped paying rent and Esposito was owed about $18,000. Because both of the tenants moved out, he was not able to get any rental assistance money, he said. Esposito ended up selling one of his houses in November. ‘I just couldn’t risk it; a third of my tenants not paying the rent,’ Esposito said. And he’s not sure that’s the only one he’ll sell. ‘Why be a landlord. Why not dump them all?’”
“Poles have become scared of rising interest rates and are stopping buying flats. In the fourth quarter, they bought them by 14 percent less than three months before. This is an anomaly because for a decade it was at the end of the year that sales jumped up strongly. Currently, the reference rate is at the level of 2.25 percent, while in the third quarter it was still 0.1 percent. And this is not the end. Two weeks ago, analysts estimated that interest rates in 2022 could reach 3-3.5 percent. Today, after the December inflation reading at 8.6 percent it is said that we will reach 4 percent. This scenario is assumed by Bank Pekao, which believes that the ongoing cycle of rate hikes will end just in July. Moreover, the bank says it straightforwardly: rates will not return to pre-pandemic levels and will remain above 3 percent for many years.”
“Teachers will cut all links with the loss-making Spire by end of March this year, lifting a heavy financial burden off the books of their Sacco. Mwalimu Savings and Credit Society Chairperson John Ochieng told members that the Sacco will either sell or kill the lender, which they bought from the late billionaire Naushad Merali in 2015. ‘It’s time for the Sacco to cut its losses emanating from the Spire Bank venture and that must be done now,’ he said.”
“With a negative minimum capital ratio of Sh3.4 billion as of September 2021, against the regulatory limit of Sh1 billion, an investor needs to pump in Sh4.4 billion for the bank to be in the industry regulator’s good books. Moreover, the bank’s bad loans have already surpassed its total loan book, which stood at Sh2.1 billion during the period.”
“China watchers have begun sketching out a likely future for the real estate market that looks far different from its more than two-decade run of supercharging economic growth, household wealth and government revenue. In short, the days of blistering home-price gains and debt-fueled building sprees by billionaire property tycoons are set to fade. ‘If we call the past decade a golden age for the real estate industry, it is now trapped in the age of rust,’ said Li Kai, Beijing-based founding partner of bond fund Shengao Investment, which specializes in distressed debt.”
“There are plenty of reasons why China needs to remold its property market. The sector is riddled with speculative buying and is over-levered, posing a risk to the financial system in a downturn. The price of housing is a burden on China’s already-shrinking families. The average cost of buying an apartment in Shenzhen was about 44 times the average annual salary for local residents in 2020. It worsens inequality as wealthy landlords hoard properties. Millions of homes sit empty and some construction projects damage the environment.”
“The chill sweeping through China’s housing market is being felt in Shenzhen, China’s Silicon Valley. There are few takers for houses in the once red-hot market as buyers are watching from the sidelines since the start of this year. The 353-unit Shangjing, the year’s first launch on January 2, has been the biggest flop. The developer Anhui Anlian Express has sold only one home in the project in the city’s southwestern Guangming district in the past two weeks.”
“‘The era where we saw long queues at sales centres in Shenzhen and sell-outs on the first day has gone,’ said Fion He, director of research at Midland Realty’s subsidiary in Shenzhen. ‘Buyers are now waiting on the sidelines as so many uncertainties lie ahead.’”
“‘I am now a little bit glad that I did not buy a flat last year, otherwise I might have bought at the highest price level,’ said Crystal Tan, who has been looking for a home in Shenzhen for two years. Tan failed four times in the past two years to get in front of the queue in lucky draws for new home purchases.”
“Tan is among many potential home seekers waiting on the sidelines now as they are afraid the souring of the housing market is far from over. ‘The expectation of a downward trend in home prices has formed,’ Chen Shen, an analyst from Huatai Securities. ‘Demand for homes is likely to remain weak and that will keep Chinese developers’ liquidity tight.’”