A report from the Dallas Morning News. “‘Many of you are hearing the housing market is losing some steam,’ James Gaines, the longtime economist for the Texas Real Estate Research Center at Texas A&M University, told members of the MetroTex Association of Realtors. ‘It does appear there is something of a slowdown in the rate of sales going on. Affordability has become an issue obviously. We are beginning to see the early signs of some sticker price stock. Incomes have not increased as rapidly as home prices and that is throwing everything out of balance.’”
The Miami Herald in Florida. “For the Michaelsons, they already know how they’ll split their time in the years ahead. Summer in East Hampton, fall in Manhattan and winter and spring in Miami. ‘Real estate is like an elevator,’ Steven Michaelson said. ‘It’s always going up. If you can own your own place, then it’s great to live in your investment.’”
The Palm Beach Post. “The median price for a home in Palm Beach County dropped for the first time in 18 months, according to a report. In August, the median price for a single-family home rang in at $480,000 — a 4% drop from July and the first decline since before the pandemic hit Florida, in February 2019.”
The Naples Daily News in Florida. “Brenda Fioretti, Broker Associate at Berkshire Hathaway HomeServices Florida Realty, pointed out that the report showed ’24 percent of pending sales during August went back on the market during the month.’”
From Inside Nova. “Was the late-2020-into-early-2021 real-estate market really as hot-hot-hot (and chaotic) as anecdotal evidence suggests? A new analysis says maybe not. New data from Zillow’ debunks common misconceptions that all buyers had the same experience, and shows the reality for most was not as grim. The typical buyer surveyed this year submitted just two offers before one was accepted, up from one in each of the previous three years. A vast majority of buyers (88 percent) had an inspection done before they closed on their new home – another case where anecdotal evidence seemed to paint a different picture. Nearly all buyers surveyed took a private tour before putting in an offer.”
“The fall market has shown signs of cooling as home-value appreciation begins to slow and inventory continues to grow each month.”
From Housing Wire. “‘We are talking about a large number of forbearance exits, between 15,000-to-20,000 a day,’ said Karthik Kumar, global head of mortgage practice at TCS. ‘CFPB has given clear guidance saying (servicers must be) proactive, and if you feel unprepared, it’s unacceptable. The onus gets back to the servicer.’”
From DS News. “Conversations around the federal block on evictions have shifted. There is a consensus on one aspect: ‘We can’t predict the future of the industry.’ But why don’t we know? Why are better predictive analytics not available for investors, servicers, and field service providers to help hazard an educated guess? Many believe that properties may be in a better condition, but others estimate that homes will be found in a much worse condition than standard default inventory. The reasons that feed into this last case are a vast and varied collection of variables that boil down to not having the data available to make any ripe estimations.”
“Under the temporary suspension order, property inspections for loans with a CARES Act forbearance are not required if the loan is current or had not reached the 60th day of delinquency when the borrower requested a forbearance. Still, inspections are required for vacant or abandoned properties. Assuming that borrowers in forbearance are truly occupying the home carries an incredible risk particularly for servicers. Knowing a home is vacant allows servicers to proceed with a fitting response regardless of the moratorium.”
“These assets have not reached delinquency keeping servicers from issuing non-claimable inspections. Non-claimable inspections are necessary and servicer actions cannot be rationalized solely by claimability and bottom line. If a servicer fails to determine an accurate occupancy status at first-time vacancy (FTV), much of the work may not be claimable since it could be deemed as mortgagee neglect or servicing error or could result in demand for reimbursement. All these outcomes can be costly to the servicer, making it imperative to know the true FTV to reduce their exposure.”
“There is general consensus to go that extra mile with nearly all industry leaders reporting that servicers should strengthen FTV to protect their interests despite the upfront, out-of-pocket costs of inspecting occupied homes. This begs the question: why haven’t they? Is it simply because they do not want to challenge the status quo?”
From News.com.au. “Coal. Meat. Wine. Cash. Beijing paints itself as playing a powerful game of coercive diplomacy. But the price may be a homegrown economic reckoning – with Chairman Xi Jinping’s authoritarian acts choking the nation’s ‘miracle’ economy. It’s a rare insight into an internal Chinese political debate. And there’s plenty to argue about. China’s property price bubble is bursting bigtime.”
The Los Angeles Times. “Classroom lights were off at Baita Elementary School. The screen at the front gate usually displaying announcements had gone dark too. Children were playing sports outside instead of learning, and mothers weren’t sure when the energy crisis gripping China would end. ‘We’ve never had power cuts like this in Shenyang,’ said one mother. She declined to give her name. Blackouts for an hour or two were annoying, if tolerable, but now entire neighborhoods in her city were losing electricity for daylong stretches.”
“Chinese social media filled with complaints from other northeastern residents of being stuck in elevators, losing water and a case of carbon monoxide poisoning when exhaust systems lost power in the middle of the night. In a manufacturing area a few miles from Baita Elementary School, all the factories appeared closed this week except for one called Jinbei, which makes car parts.”
“‘What happened was a repeat of what has happened every time there is a negative economic shock in China,’ said Lauri Myllyvirta, lead analyst at the Center for Research on Energy and Clean Air. ‘The government uses real estate construction and infrastructure construction as a way to stimulate the economy. That’s what led to this.’”
“When coal is expensive, many plants report ‘maintenance outages’ and reduce or stop operation rather than suffer losses. ‘No one will generate power to lose more money because they know they’re not only burning coal but also burning money,’ said Li Shuo, senior global policy advisor at Greenpeace East Asia.”
From Business Insider. “The name Evergrande is becoming as famous in 2021 as the name Lehman Brothers was in 2008. The colossal Chinese real-estate developer is wobbling, threatening markets far outside China’s borders. But as big as a $300 billion debt default is, it could just be the tip of the iceberg. Rising prices are ‘a function of supply-side bottlenecks over which we have no control,’ Federal Reserve Chair Jerome Powell told the House Financial Services Committee.”
“Evergrande, then, is simply the most visible risk facing the global economy. The iceberg standing in the way of recovery is larger than it first appears. The energy crunch, the transPacific decoupling, and the ghost of stagflation are monsters lurking just under the waves.”
From Daiji World. “The default troubles at the globes most indebted property development, Evergrande seem like small embers compared to the $8.2 trillion worth of China local government financing vehicles outstanding, Forbes reported. Analysts at Goldman Sachs have flagged the risk of surging local government debt levels that President Xi Jinping’s men have done their best to hide.”
“The data that Goldman’s Maggie Wei highlights is as of the end of 2020. Clearly, the tally is higher now, perhaps markedly. Ten months ago, these shadowy investment schemes had reached 53 trillion yuan, up from 16 trillion yuan, or $2.47 trillion, in 2013. They now amount to roughly 52 per cent of China’s gross domestic product, topping the official amount of outstanding government debt, Forbes said. In other words, as scary at the $300 billion Evergrande story might be, Xi’s government has much bigger problems on its hands.”
“The most acute: keeping GDP this year from falling too far below the 6 per cent Beijing hoped to produce without adding to the nation’s bubble troubles, the report said. The forces behind local governments sitting on financing-vehicle debt worth twice the size of Germany’s GDP date back to 2008.”
“Even before the Lehman Brothers crisis, Communist Party dynamics encouraged municipal borrowing binges. The way local officials got attention in Beijing, and rose to national prominence, was producing above average GDP rates, the report added.That incentivised a couple of dozen prefectural leaders to engage in an infrastructure arms race, of sorts. Metropolises raced to build skyscrapers, six-lane highways, international airports and hotels, white-elephant stadiums, sprawling shopping districts and amusement parks.”
“After the subprime crisis, this strategy shifted into overdrive. Local governments were a key engine then-President Hu Jintao used to avoid the worst of the global financial crisis. The same with Xi’s men when the Covid-19 crisis arrived in early 2020. The trouble with China’s LGFV boom is the opacity accompanying it. For all their talk of giving market forces a ‘decisive’ role since 2012, China’s leaders have made the country less transparent. Nor has the credit rating system kept pace with the growth in Chinese capital markets, the report added.”
“These days, international investment banks and news organisations worry that warning about China’s local government debt bubble will open them up to retaliation. Not a great look for Asia’s biggest economy.”