A report from Market Watch. “Fannie Mae and Freddie Mac may stop offering certain mortgages as they prepare to privatize, but borrowers won’t be left behind, the companies’ chief regulator said. ‘Fannie and Freddie must not repeat the mistakes of the crisis by stretching to serve borrowers who are better served by FHA,’ said Mark Calabria, FHFA director.”
“Historically, Fannie and Freddie have competed for market share with the FHA, and in recent years the two enterprises have offered more mortgages with low down payments and to borrowers with high debt-to-income ratios, similar to the types of loans the FHA was designed to offer to lower- and moderate-income Americans. Separately, Calabria once again raised the alarm regarding the risk that Fannie and Freddie could fail again. Currently, the dollar amount in loans that the two enterprises own or guarantee is roughly 500 times larger than the amount they have in capital reserves.”
“‘We’re not forecasting a downturn, but if we do have a downturn in the next couple years, they will fail,’ Calabria said. ‘They will become insolvent, and they will run out of capital.’”
From Inside Nova in Virginia. “In every major jurisdiction of the local area, the median per-square-foot price for housing for the January-through-September period declined, in many cases by double digits, according to MarketStats by ShowingTime, based on listing activity from Bright MLS. rlington led all local jurisdictions for the nine-month period, but its median per-square-foot cost of $436 was down 6.8 percent from $468. The negativity continued throughout the area.”
“The median per-square-foot cost in the city of Falls Church was $375, down 13.2 percent from $432. The median cost in Alexandria was $368, down 5.4 percent from $389. The median cost in Fairfax County was $280, down 11.7 percent from $317. The median cost in Loudoun County was $200, down 11.1 percent from $225. The median cost in Prince William County was $169, down 20.3 percent from $212.”
From DS News. “While in most cases a the price of a home should not exceed three times a buyer’s annual income, in some cities, many potential buyers may find it difficult to find a home within those parameters. Lending Tree examined the nation’s 50 largest cities to determine where buyers will have to take out the largest loans, and found that many are situated on or near the West Coast.”
“Five of the top 10 cities where buyers are stretching themselves the most are in California, and Los Angeles and San Diego have remained the 2 cities where borrowers have to stretch their budgets the most. ‘Though there is some speculation that the housing boom in California may be nearing its end, home prices in the state are still high,’ said LendingTree Chief Economist Tendayi Kapfidze. Outside of California, Salt Lake City is the place with the highest leverage ratio.”
From Bloomberg on California. “It’s meant to be one of the crown jewels of downtown Los Angeles’ urban renaissance but now it’s in limbo — plagued by lawsuits from subcontractors, and victim of an ongoing trade dispute between China and the U.S. and a Beijing crackdown on credit and capital flight. Construction has largely stalled at the three towers of Oceanwide Plaza across from Staples Center. In downtown San Francisco, Oceanwide halted construction this month on one of the two towers of a mixed-use development.”
“While L.A.’s Oceanwide Plaza remains in limbo, the downtown market for high-end condominiums is becoming a buyers’ market, said Christiano Sampaio, founder of real estate brokerage Loftway. The influx of Chinese investment that helped inflate real estate assets from Vancouver to Sydney is abating.”
“‘A few years back we had a lot of Chinese buyers but that has slowed down,’ Sampaio said. ‘There’s more inventory now and buyers are postponing making a decision.’”
The Los Angeles Times in California. “In Holmby Hills, one of the biggest homes on the market just got a big price cut. Maison du Soleil — the 30,000-square-foot mansion of late fashion mogul Max Azria — has resurfaced for sale at $78 million, down $10 million from its previous asking price.”
The Commercial Observer in New York. “The performance of the New York City multifamily sales market has always been of great interest to the investment sales brokerage community given the significant number of multifamily assets that are so evident across all the boroughs of New York. The new rent regulation reforms which passed in June have cast uncertainty over the market relative to where values are headed and have negatively impacted the volume of sales.”
“Multifamily property sales in excess of $10 million in Manhattan are on pace for $2.6 billion this year, a 42 percent drop from the $4.5 billion which occurred in 2018. This total would be 78 percent below the record $12 billion of sales that occurred in 2015. Taking the $5.46 billion Stuyvesant Town / Peter Cooper Village transaction out of the 2015 statistics is appropriate given the massive size of that transaction. Removing that sale from the data, the present pace is still 61 percent below the activity seen in 2015.”
“In the elevator sector, this year‘s pace is $2.2 billion which would be 30 percent below 2018’s $3.1 billion and 73 percent below the $8.2 billion achieved during the cyclical peak in 2015. In the walk-up sector, the pace of sales is a mere $400 million this year which is on pace to be down 70 percent from the 2018 total of $1.4 billion and an astounding 89 percent below 2015’s $3.8 billion total.”
“Given the downward pressure on property values that reform has exerted, these performance metrics are not surprising. The extent to which values have fallen is yet to be determined as it is too early to know.”
From KELO Land in South Dakota. “Population changes in South Dakota during the next 10 years point toward more retirees looking to sell their homes but fewer younger people being able to buy them. The director for the Black Hills Knowledge Network delivered that sobering message Tuesday at the South Dakota Housing Conference.”
“Jared McEntaffer has looked at trends and sees imbalance. People reaching retirement age will nearly double by 2030, he said, while adults younger than 65 will grow only six to nine percent. At the same time, young people’s pay levels during the past decade haven’t kept up with their growing college debts, according to McEntaffer. He said they’re tending to live alone or with roommates longer than before, and they’re more likely to be in apartments rather than houses.”
“There’s already a softening Midwest housing market. ‘What we’re seeing is the demand pulling back. And that’s the big component, that’s why nationwide, we’re seeing home prices falling even though the interest rates are falling. And that’s caused by buyers pulling back. That’s caused by people being less confident in the future of the economy and sort of delaying those purchasing decisions,’ he said.”