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“Year-over-year, more than a million cash-out refis were originated. In many cases, homeowners take a cash-out loan on their home and buy a rental property with cash. When they want to invest again, they do a cash-out refinance on their existing investment property to buy another one. Specializing in VA and Non-QM loans, we have access to wholesale rates and offer to beat or match any rate on the market!”
From Motley Fool. “Because the home guarantees the loan, mortgage loans are secured loans — which is why the rates are lower than with many other kinds of debt. The risk of loss is lower for lenders. But, to ensure that the house acts as sufficient collateral, lenders set a maximum loan-to-value ratio. That’s the limit on the amount of money they are willing to loan you to a certain percentage of your home’s value. Many lenders will make loans with a loan-to-value ratio higher than 80%. In fact, some will allow you to borrow as much as 97% of the value of the home.”
From Nerd Wallet. “National averages provide a good big-picture look at what’s happening in the housing market, and in the third quarter, that story is a slight improvement over the last: Prices were down a smidgen (1%) and inventory up 22% nationwide, quarter over quarter. But homes were listed at 5.3 times the median first-time home buyer income, when three times your income is a long-standing affordability rule of thumb.”
“The most affordable metro areas in the third quarter, as usual, are in the Midwest and Rust Belt regions. They include Pittsburgh, where homes are listed at 3.1 times first-time buyer income, Cleveland (3.3), St. Louis (3.4), Buffalo (3.6) and Baltimore and Minneapolis (3.9). The least affordable metro areas for first-time buyers are, once again, all in California. They include Los Angeles (12.1), San Diego (9.2), San Jose (8.3), Sacramento (7.6) and Riverside (7.4).”
“Some metros, however, saw price drops that were likely noticeable. Prices fell double digits from the last quarter in three metros analyzed: Pittsburgh (down 12%), Cincinnati (dropped 10%) and Milwaukee (down 10%), and when compared with last year, the decreases were even more significant. Prices fell double digits, year over year, in 10 metros, including a 21% drop in Milwaukee.”
“The high list prices are no doubt luring home sellers into the market, and we saw the number of active listings climb 31% compared with last quarter. This is particularly notable as we typically see home listings begin to wane in the third quarter. Some metros saw quarterly increases big enough that hopeful buyers would notice their options expanding. Thirteen metros saw inventory rise 40% or more. Available homes in Austin, known for topping lists, rose 73%.”
The Tribune Democrat in Pennsylvania. “Almost 20% of Johnstown’s population lives in public housing or Section 8 rental units. As the city’s overall population continues to decline, however, the number of people living in public housing or Section 8 grows as a percentage, which affects the overall poverty rate. Johnstown’s poverty rate was 34.3% between 2009 and 2013, according to Census data. It now stands at about 38.5%. The federal government will not likely close and tear down usable housing stock in one municipality just to spend money constructing similar buildings in other communities.”
“‘My understanding is they’re looking at it like a federal program,’ said Michael Alberts, Johnstown Housing Authority’s acting executive director. ‘They don’t care that Johnstown’s population has declined. If we told them that, ‘Hey, our population has declined. We don’t need this public housing. We want to knock down a couple buildings.’ They’re going to tell us, ‘You’re at 99% occupancy rate. You’re crazy. No way, no how.’”
From Stuff New Zealand. “Could we be building too many houses? Since March, new home consents have been at levels unseen since the building industry’s 1970s heyday. And there is more to come. The Ministry of Business Innovation and Employment’s latest National Construction Pipeline Report forecasts 265,000 new dwellings will be consented over the next six years, at an average of more than 44,000 per year.”
“Does this mean that supply could soon exceed demand, and result in too many homes being built? Economist Tony Alexander cautions against putting too much emphasis on the role of supply in the house price equation. ‘This is a red herring. Extra supply of a thing will constrain prices, but that’s not the same as saying there are not enough houses for people to occupy. Prices have not soared 39 per cent since March 2020 because population growth has boomed.’”
“Record low interest rates and the temporary removal of loan-to-value ratios were the reason, he said. But the belief in excess demand could prompt over-building – especially if there was a net migration outflow ahead. Many parts of the country do not have shortages, although Auckland does, and this means the end result could be over-supply in some areas, Alexander says. ‘At some point over the next year, we are going to be asking where all the people needed to fill all these new townhouses are going to come from.’”
The Daily Telegraph in Australia. “Properties priced below the Sydney median house price of about $1.25 million have been getting a stronger response from buyers. It comes as agents revealed the fear of missing out that defined the mood of Sydney home seekers earlier this year has been replaced by a fear of overpaying.”
Two reports from Bloomberg. “A wave of selling swept through Chinese developers’ bonds and shares after the sudden plunge in a major property firm’s notes. Trading was halted in six of Shimao’s yuan bonds after they plunged. A bond issued by one of Shimao’s local units suffered the largest haircut in China’s exchange-traded repo market last week, according to Bloomberg-compiled data. Borrowers putting up a Shanghai Shimao Jianshe Co. note due 2025 for collateral get just 35% of the note’s face value as cash, down from 50% the prior week.”
“‘A major price collapse or a downfall of Shimao will cause lapse in confidence in cross-over investment grade names in China property, which acts as the final refuge for the sector,’ according to Anthony Leung, head of fixed income at Metropoly Capital HK. The impact could be more devastating than debt crises at Evergrande or Kaisa because they were of much lower credit quality, he added.”
“Across China, tens of millions of square feet of unfinished apartment buildings — the legacy of a real estate boom gone awry in 2021 — are derailing countless dreams of owning a home. In a country where private homeownership was only legalized two decades ago, ordinary Chinese are discovering how quickly fortunes can turn in the housing market. Creeping price declines and plummeting sales in recent months have called into question the way freewheeling property developers have financed, built and marketed homes to the masses.”
“Many smaller developers also followed Evergrande’s familiar strategy: borrow heavily, build aggressively — and make buyers pay in full upfront, sometimes before ground is even broken. Until the bottom fell out, nearly nine out of every 10 homes in China were ‘pre-sold,’ according to Hongta Securities Co. Buyer protections commonly used abroad, such as escrow accounts and installment payments, have tended to be weak.”
“The result is a mirror image of the 2008 subprime fiasco. Back then, in the U.S., it was homebuyers who got in over their heads. This time, in China, it’s builders. Gary Chen is one of the 1.6 million Evergrande customers who’s waiting for his home to be finished. In 2019, Chen plowed the equivalent of $55,000 — 13 years of savings, he says — into a three-bedroom apartment in the Jiu Long Bay area of Kunming, the provincial capital of Yunnan. Two years later, construction is stalled. Dozens of cranes loomed beside the unfinished tower block, Chen said last month. The shallow foundations were soaked with water. Some 4,000 units remained unfinished.”
“‘It never occurred to me that things would go wrong for a developer of this scale,’ says Chen, 33, who declined to reveal his job.”
“Many who bought earlier are aghast. One recent buyer, who asked to be identified only by his surname, Tan, said he purchased a unit in the Evergrande Mansion development in Wenzhou, in southeastern China, only to have the developer slash prices there by a third, to below going rates. In the eastern city of Taixing, another buyer, Yin, said he regretted purchasing from Evergrande before the company’s troubles came to light, even though his unit was delivered on time.”
“Yin figures selling now will be difficult given the damage to Evergrande’s reputation and various construction flaws in his building. ‘Prices will drop for sure,’ he says.”
“And so what once seemed unthinkable now appears quite possible: the heady days of selling homes in China before they’re built might be threatened. Many developers remain unprepared for the worst. A nationwide ban on pre-sales could wipe out as many as half of small builders, according to Zhang Dawei, an analyst at Centaline Group.”
“‘Developers could be forced to gradually shift away from pre-sales to sale of completed projects in the future, though that’s going to take a while,’ said Ziv Ang, a Kuala Lumpur-based analyst at UOB Kay Hian. ‘The current financing environment remains tough for most developers, meaning they would be under huge pressure if they were to make that shift.’”