A report from the Los Angeles Times. “Christopher Thornberg, founding partner with Beacon Economics said Orange County and the rest of Southern California are relatively inexpensive compared with other major metropolises around the world. Given the area is home to major industries, entertainment and beautiful weather, home prices ‘are going to continue to go up.’ ‘It’s not a bubble,’ Thornberg said. ‘Everyone has got to get used to it.’”
“Assuming a buyer put down 20% to buy a $1-million house, the monthly mortgage payment — including property tax and insurance — would be $4,840 if the interest rate was 3.55%, the average at the beginning of February. At this week’s average mortgage rate of 5.11%, that monthly payment would be $5,574 — an increase of $734 a month, according to a Redfin mortgage calculator.”
From City News Service in California. “High prices, homelessness, rising crime and health concerns are taking their toll on the quality of life in Los Angeles County, with a UCLA survey released Friday revealing the lowest level of residents’ overall satisfaction in the survey’s seven-year history. ‘What the pandemic couldn’t do over the last two years, inflation and increases in violent and property crime succeeded in doing,’ said Zev Yaroslavsky, director of the Los Angeles Initiative. ‘It appears that the dam has burst this year.”’
From Reuters. “Major central banks, already plotting interest rate hikes in a fight against inflation, are also preparing a common pullback from key financial markets in a first-ever round of global ‘quantitative tightening’ expected to restrict credit and add stress to an already-slowing world economy. ‘We don’t want to be feeding the inflation process…Naturally a lot of central banks are pulling back all at the same time. That is appropriate,’ St. Louis Fed President James Bullard said earlier this month.”
From Bloomberg. “After another wild week in global money markets, traders are betting big on the biggest regime shift in Europe in years: the end of the negative interest-rate era before 2022 is over. The interest-rate swaps market now projects the European Central Bank will deliver three quarter-point hikes by December — winding down the eight-year experiment with sub-zero borrowing costs that’s saddled savers with financial repression and helped funnel billions of euros into speculative assets.”
“That’s creating a sea change in the region’s bond markets, where the pool of negative-yielding debt has collapsed to the equivalent of less than $300 billion from a peak of nearly $10 trillion in 2020.”
From The Week. “Surging mortgage rates are starting to test the resilience of ‘the gravity-defying pandemic housing boom,’ said Conor Dougherty and Jeanna Smialek in the New York Times. ‘Open houses have thinned. Online searches for homes have dropped.’ And cancellations of new home constructions are inching up, concerning builders.”
“‘The red-hot market has remained resistant to rising mortgage rates,’ said the Economist, but resistant ‘does not mean impervious.’ Housing prices have remained high because of limited supply, a circumstance that is largely ‘an artifact of the pandemic.’ Now, 1.6 million homes are under construction, the most since the 1970s and more than twice the number of homes for sale at the end of last year. Soon, the combination of all this new construction and higher interest rates ‘could move America from a property shortage into a glut.’”
The South Haven Tribune. “Homes sales remain strong in the South Haven area, however, sale prices show signs of falling, according to the latest statistics from the Southwestern Michigan Association of Realtors. The average selling price for single-family houses in March 2022 dropped 17 percent to $529,264 from $637,070 in March 2021, while the median selling price for single-family houses fell 11 percent to $430,000 compared to $485,000 in March 2021.”
From WBRC in Alabama. “With the housing market now a sellers paradise, many buyers are foregoing a home inspection in hopes of securing the home of their dreams. If you’re not careful you could wake up in a nightmare, in a home riddled with issues. This isn’t a new phenomenon. Potential buyers have decided to forego inspections before the housing market got hot, but it is now happening exponentially more. Zachary Ervin owns Smartmove Inspection and says his business has seen a dip but his business has been fortunate compared to others.”
“Ervin actually just completed an inspection for a family who now wishes they would have hired an inspector prior to purchasing. ‘We had a buyer just here recently that went way above asking price. They then contacted us to do a home inspection and they had already moved in, but we found major problems with the house. We found foundational issues totaling thirty to fifty thousand dollars in damages that could have been avoided if they had a home inspection from the very get go,’ said Ervin.”
The New York Post. “Alicia Keys and her husband have finally sold their 5-acre New Jersey estate — at a massive loss. The music power couple bought the property in two separate transactions for a $12.1 million sum nearly a decade ago. They first put it on the market for $14.9 million in 2015, but slashed the price to $9.9 million last August. Now, Gimme can exclusively reveal the closing price: The spread went for just $6 million.”
From WECT. “A financial advisor in Wilmington is accused of running a ‘Ponzi scheme’ that resulted in the loss of millions for his investors, according to a complaint filed by the Securities and Exchange Commission. The complaint states that Shawn E. Good defrauded clients, including retirees and a single mother of young children, of at least $4.8 million, resulting in more than $2 million in losses. According to the complaint, from December 2012 through at least February 2022, Good is accused of soliciting clients to transfer funds to his personal bank account ‘ostensibly to make low-risk investments in real-estate development projects and supposedly tax-free government bonds.’”
From Reuters on Canada. “Household debt is 186% of disposable income, a level that is the highest by far among G7 countries, data from the Organisation for Economic Co-operation and Development shows. There’s a big risk that asset markets such as the housing sector ‘end up collapsing as rates rise,’ said David Rosenberg, chief economist & strategist, at Rosenberg Research. ‘The bottom line is (that) central banks … overestimated the amount of stimulus that was required last year,’ said Darcy Briggs, a portfolio manager at Franklin Templeton Canada. ‘They overstayed their welcome.’”
From Homes & Property in the UK. “After we helped a recent client to buy a new home they asked us to help sell a central London flat they also owned. It had no outside space, nor did it have anywhere to work from home so in the current market they would end up selling at a significant loss. We advised them to wait until demand for city centre flats increases back to pre-pandemic levels.”
The Free Press Journal on India. “The Supertech Twin Towers in Noida that are supposed to be decimated next month is representative of the fall of the real estate czars in the recent past, especially in Delhi-NCR. The real estate landscape in the region suffered multiple blows as leading names of the trade were mired in scandals in the recent past and some of them even landed in jail. In the absence of a proper regulatory regime (such as RERA, which came later), the financial ring-fencing of projects was not proper, which allowed developers to use booking money from one project to acquire more land, which was only based on the underlying premise that the robust absorption will sustain.”
From Smart Life. “Li Huixiang, a property dealer within the central Chinese metropolis of Zhengzhou, had been trying ahead to a bumper March. In an effort to spice up town’s flagging property sector and the native financial system together with it, municipal officers unveiled an array of incentives, together with decrease mortgage charges and money subsidies for brand new dwelling patrons.”
“However Li, usually a star agent at one of many largest residential developments in Zhengzhou, has bought solely 5 residences at Sunac Metropolis for the reason that measures had been introduced — a fraction of his regular gross sales quantity. ‘The stimulus measures aren’t sufficient to offset destructive components which can be displaying little signal of easing,’ Li mentioned, citing components together with journey restrictions associated to Covid-19 and falling family incomes.”
“One Beijing-based authorities coverage adviser, who requested to not be named, mentioned that even earlier than Covid lockdowns started proliferating in March, ‘the highest management had underestimated the affect of the true property meltdown on the broader financial system.’ ‘The state of affairs,’ he added, ‘might worsen earlier than it will get higher.’”
“Advertising employees at seven low and medium-priced improvement tasks in Zhengzhou informed the Monetary Instances that they weren’t assembly their month-to-month gross sales targets. The town is plagued by dozens of stalled tasks deserted by bankrupt builders. ‘Individuals are afraid of getting into the market when they’re surrounded by unfinished buildings constructed by distressed builders,’ mentioned an official on the Zhengzhou department of China Retailers Property, a Shenzhen-based group.”
“One would-be purchaser having second doubts is Zhang Jian, a Zhengzhou engineer who final week pulled out of a Rmb1.2mn buy of a property constructed by Nation Backyard, China’s largest actual property group by gross sales. ‘I’m going to attend for the market to weaken additional,’ he mentioned.”
From Stuff New Zealand. “Thirty-year terms were also more common for first home buyers, making up 74% of new mortgages to the group over the last three year – a figure that has jumped to 83% this year. CoreLogic senior property economist Kelvin Davidson agreed increased prevalence of longer-term mortgages cut off a traditional method used by struggling borrowers to cope. He said the most vulnerable groups were recent entrants to the market, who had bought at the peak in November and December, and had gone in with only a 10% deposit.”
“Davidson said the Reserve Bank was likely to continue to increase interest rates with inflation at a 30 year high. ‘The housing market is going to be a little bit collateral damage because they simply have to get general inflation under control,’ he said.”