A press release from the used shack sellers. “As the final countdown begins to Realtor.com® Listapalooza, the company today released data that shows homeowners are gearing up to sell this Spring and Summer. According to the report, 64% of prospective 2022 sellers anticipate doing so within the next six months. When asked why they’re planning to list in 2022, surveyed sellers’ top reason was wanting to profit off the current market. Compared to those who planned to list last spring, this year’s prospective sellers have higher expectations of the hot housing market, including asking for more than their home is worth (42% vs. 29%) and refusing to pay for repairs or improvements (28% vs. 24%).”
From Colorado Public Radio. “The number of homes for sale in the Denver metro area, the state’s largest housing market, spiked last month. At the end of March, there were 2,221 homes for sale in the Denver market, which includes Boulder and the surrounding suburbs. That’s an 80 percent increase from the previous month. The surge in listings and higher mortgage rates have cooled the market somewhat, Andrew Abrams, a realtor in Denver, said in the realtor association’s report.”
“Earlier this year, it was common for homesellers to receive dozens of offers on a single home, Abrams wrote, leading some buyers to make offers that were six-figures above the asking price. Now, there’s likely just a few competing offers, he said. But buyers are still primed for bidding wars, he said. ‘It’s become standard for buyers to come in very aggressively on offers,’ according to Abrams.”
The Los Angeles Times. “A few years after risky mortgages and related investments led to a global financial collapse, the Federal Reserve put out a handbook to help consumers make smarter choices about their home loan options. The focus was on adjustable-rate mortgages, whose exotic variants were among the prime culprits in the meltdown. Rates for those mortgages have bounced back up, and on Friday they hit their highest level since 2018. That’s an increase of about $625 per month on a $500,000 loan.”
“It’s important to compare a lender’s margin to its competitors’ and to the current situation. If the margin is large enough, it will guarantee that your rate will go up after the initial period even if interest rates are the same as they are today. In fact, that was a trap often laid in the days before the subprime meltdown. ‘We saw a lot of ARMs that only went up,’ said Ira Rheingold, executive director of the National Assn. of Consumer Advocates. ‘They never went down.’”
“If you use an interest-only ARM, you could be hit with a double whammy once the interest-only period ends: Your interest rate will adjust and you’ll have to start paying down your principal. And because you put off those principal payments for several years, you’ll have to pay more per month than if you had been paying down principal from the start. For instance, on a $500,000 loan with a 5% initial interest rate, you’ll pay $600 less per month with an interest only mortgage. But when the initial period ends, your payments will jump by $840, or more if the interest rate goes up.”
“When property values are rising fast, though, new owners can build up equity without paying down principal. That’s the situation in many neighborhoods today, just as it was during the go-go years of the early 2000s.”
From Bloomberg. “A gauge of global bonds dropped below a key fixed-income watermark after Federal Reserve Governor Lael Brainard signaled a quicker-than-expected rundown of the central bank’s debt holdings. The Bloomberg Global Aggregate Index fell below a measure of so-called par value Tuesday, with its price falling to 99.9 — under the key 100 level at which bonds are often sold to investors. It’s the first time since 2008 that the gauge has traded at a discount to face value.”
From Market Watch. “UBS’s Solita Marcellii’s team pegged monthly mortgage payments nearly 50% higher since December 2020, with the median price of existing homes rising roughly 20% over the same stretch. After two years of ‘mortgage mania,’ the UBS team estimates that roughly 28% of median household income now goes toward monthly mortgage payments, nearing the 31% threshold seen in the mid-2000s in the run-up to the global financial crisis.”
From Yahoo Finance. “Tick off a loss for the modern monetary theorists amid rising inflation, says InfraCap Founder and CEO Jay Hatfield. ‘The Fed policy … has been extraordinarily erratic, really dating back to when Powell took over and almost created a recession in 2018,’ John Kicklighter, chief strategist at DailyFX, told Yahoo Finance Live. ‘But the 82% increase in the monetary base was an experiment to see if we could get away with, effectively, modern monetary theory. And now the verdict is in. You can’t.’”
The Globe and Mail. “I reviewed all the BlackRock iShares Canadian bond exchange-traded funds this week to see whether any sector of the bond market was in the black year-to-date. Out of these 40 funds, the only two that are in positive territory for 2022 are new short-term funds based on U.S. Treasury Inflation-Protected Securities (TIPS). In both cases, the gains were less than 1 per cent. All the other iShares bond ETFs are in the red, with a few in double-digit territory.”
“If this were the stock market, we’d call this a crash. The losses aren’t as great as a full-blown equity plunge, but this is the worst bear bond market we’ve seen in many years. So, what’s the answer? I’m moving much of my fixed income money into one-year guaranteed investment certificates. Some small institutions such as EQ Bank are offering 2.25 per cent and are covered by deposit insurance. That’s not a lot, and it’s below the inflation rate. But it’s better than standing pat in bond funds and watching your money drain away.”
The Street Journal. “Marksman Chinedu Ijiomah, the Chief Executive Officer of Chinmark Group, the firm involved in a ponzi scheme has reportedly fled Nigeria. This comes as one of his investors gave up the ghost after attempting suicide, being unable to retrieve her funds, said to be family money. Also, some of those who invested funds in his company are preparing mass action lawsuit against him. The investors were promised mouthwatering return on investment to commit their funds running into billions of naira in Chinmark said to be into real estate, logistics, hospitality, and food businesses.”
“The angry investors lamented losing their hard-earned money to Chinmark while alleging that the group was fraudulent.”
From Malaysia Today. “Beneath the glitter of Malaysia’s IT city Cyberjaya, a slow decline appears to be taking place, perhaps most clearly seen in its real estate segment which has been struggling to stay afloat in the aftermath of the Covid-19 pandemic. While it once aspired to become the country’s Silicon Valley, throughout the city, a number of luxury condominium complexes are now falling into disrepair – abandoned, neglected and bleeding tenants.”
“Adzman Shah Mohd Ariffin, who has more than 30 years of experience in property research and analysis, said he used to make nearly RM2,000 a month renting out just one residential unit at NeoCyber. ‘But all that’s just a memory now,’ he said. ‘Now there is too much dumping of unrented units. It’s an oversupply.’”
From Radio New Zealand. “The failure of a South Island building company may be a sign of things to come for the construction sector. Otago Homes Limited, a franchise of Landmark Homes, entered into voluntary administration last week. BDO partner and construction industry specialist James MacQueen said the situation was not unique and he expected ‘a lot more’ firms to collapse later in the year. ‘I think by the middle of this year we will start seeing more collapses because it’s pretty tight out there at the moment,’ MacQueen said.”
From Domain News. “This time last year, the run up to the Easter holidays was anything but normal. Australia’s property market was in a state of desperate frenzy. Auction clearance rates along the eastern seaboard were at record levels. Every single capital city was being flooded by new listings as vendors jumped at the chance to sell in a booming market – but even still, the supply of property for sale was no match for the insatiable level of buyer demand. FOMO was pushing prices to unthinkable heights.”
“The lead up to Easter 2022 is looking very different. Australia’s capital city property markets are no longer moving in the same direction. Some, like Sydney and Melbourne, have peaked and are now softening. New property listings are rising again leading into Easter but the difference between this year and last year is the buyers. ‘FOMO is no more. Buyers are taking their time and contemplating decisions. They are not willing to make a compromise like they were last year,’ said Nicola Powell, Domain chief of research and economics.”
From Bloomberg. “The biggest investors in China’s junk property bonds reduced their exposure for the first time in months, a turning point after they previously doubled down through distress and default risks. Institutional investors which publicly file their holdings trimmed exposure in March after adding $3.7 billion of dollar bonds in par value terms between early November and the end of February, according to Bloomberg data. BlackRock Inc. cut $370 million last month to bring the value of its holdings – if calculated at par – to just under $5 billion. A BlackRock spokesperson declined to comment on company holdings.”
“The move underscores how even long-term supporters of China’s beaten-down property bonds may be losing enthusiasm for bargain hunting. While policy maker vows for broader market support helped spark a rally in junk dollar bonds — most of which are from developers — from mid-March, the securities still lost about 18.6% last quarter in the worst tumble in more than a decade. That came amid a wider global bond sell-off, as central banks look to tighten policy to combat surging inflation.”
“‘The market is running out of time and running out of steam. A lot of investors have been caught by surprise over the past couple of months,’ Tam Chun-Him, head of Asia fixed income and currencies at RBC Wealth Management said by phone. ‘If you exit now, there’s zero upside, but at the same time there are no triggers for improvement.’”
“A gauge of Chinese high-yield debt, which was close to par a year ago, has over 50% of its members trading below 30 cents as of the end of March. BlackRock’s Asian High Yield Bond Fund lost 26% over the last 12 months. The Fidelity China High Yield Fund has lost 28% over the same time period. A UBS China High Yield Fund, managed by Briscoe, is down 46%. For all three, 2021 was the worst calendar year for performance since inception.”