A report from the Mercury News in California. “Investors bought up just 4% of the homes sold in the San Jose metro area, and 6% in San Francisco and the East Bay last year – about the same level as 2015, according to Redfin. ‘Investors want high returns,’ said Redfin chief economist Daryl Fairweather. ‘The Bay Area is kind of past its heyday.’ San Jose real estate advisor Paul Getty said investor buying and selling last year was unlike anything he had seen in his decades-long career. ‘The movement out of California,’ he said, ‘has really become like a tidal wave.’”
The Santa Barbara Independent in California. “In the past decade, the City of Santa Barbara saw the addition of 388 new units of housing built, much of it rental. Admittedly, precious little of this was remotely affordable. But still, by Santa Barbara standards, that was unprecedented. Here’s the bad news. In that same period, the City of Santa Barbara saw the number of housing units sitting ‘vacant’ — at least as defined by the U.S. Census — increase from 2,371 to 2,825. I’ll do the math for you. We had 454 more vacant homes in 2020 than we did in 2010.”
“Even worse, the number of new housing units we built in the past 10 years was actually exceeded by the number of housing units that we lost because they went vacant. That also took me a while to decode, too. But eventually I got there. That’s a net loss of 66 housing units. Obviously, the largely illegal vacation rental market is driving Santa Barbara’s Empty House Syndrome.”
The Austin Monitor in Texas. “Short-term rental platform Airbnb is pushing City Council to change its long-held stance against working with companies that help STRs to operate and, in the process, take business away from area hotels. Commissioner Felipe Garza noted that investors are purchasing single-family homes at high prices so they can list the properties as short-term rentals and wanted to know what STR companies are doing to prevent the displacement of longtime residents from East Austin neighborhoods.”
“‘There seems to be displacement sometimes where Airbnbs go,’ he said. ‘What protections are you guys going to be providing to not displace members of the community, to make sure that where there’s new Airbnbs there’s affordable housing … not just affordable as defined by Realtors but through Section 8 and stuff like that?’”
The Brooklyn Reader in New York. “Dan Borrero says he’s $60,000 in debt due to a tenant who stopped paying during the pandemic, despite staying employed. ‘The reality is that the big guys only had 5% losses that they spread across their units, but mom-and-pop landlords that own four doors or less … some live on the house floor and they have tenants upstairs not paying rent … they’re struggling to pay the mortgage and increase in property taxes and all the expenses that come with it. It’s like getting water from a rock. And what do you tell the bank?’”
From USA Today. “It didn’t take long for Karin Smith to realize the RV life was not for her. Smith ended up selling the RV six months after she bought it. She never got behind the wheel. ‘It just started to feel like a money pit,’ she said. ‘I really started thinking about things like: Is this safe? What would I do with Wi-Fi? I work remotely, do I work listening to neighbors (at an RV park) argue or 14 people having a party next door for two days? It all just fell apart.’”
“Smith said she’s glad she got to dip her toes in the RV world, but warns potential buyers to weigh their options before making the purchase. ‘The shine came off once I bought it,’ she said. ‘We all watch the blogs or the YouTube videos and (RV life) looks so cool. … I thought we would visit all the national parks and honestly, we can. We can drive to them in a comfortable car, we can fly to them and stay in the parks. We can rent an RV for cheaper at this point.’”
From Bloomberg on Australia. “Sydney home prices have fallen for the first time in 17 months, signaling that Australia’s housing boom fueled by the pandemic and ultra-low interest rates is all but over. The country’s housing boom, mirrored in other countries during the pandemic, is fizzling out ahead of a widely expected tightening cycle by the central bank. ‘With rising global uncertainty and the potential for weaker consumer sentiment amidst tighter monetary policy settings, the downside risk for housing markets has become more pronounced in recent months,’ said Tim Lawless, CoreLogic’s director of research.”
The New Zealand Herald. “Rising interest rates have taken the first bite of the housing market with the latest figures from OneRoof showing an easing of growth across most of New Zealand. For the first time in years, house values fell in five Auckland suburbs. Torbay on Auckland’s North Shore dropped 4 per cent, Avondale dropped 3.7 per cent, Auckland Central dropped 3 per cent, Glen Eden dropped 1.3per cent, Te Atatu Peninsula dropped 0.3per cent, and New Lynn dropped 0.1 per cent. This translates to around $60,000 to $10,000 off the sale price.”
“The shifting down in gear is a sign that new lending rules and rising interest rates are starting to take effect with several regions’ quarterly growth well below the nationwide average, said OneRoof editor Owen Vaughan. ‘We are seeing it with clearance rates in the auction room where areas such as New Lynn that had rapid growth 18 months ago have now hit the ceiling. New restrictions mean buyers are pre-approved for a lot less which means they are also restricted how they can spend that money.’”
“For those selling their home, it meant adjusting to ‘new market realities’ where buyers had smaller bank-approved loans so there was an increasing number of houses passed in at auction. ‘The fear buyers had of missing out on a property had now been replaced with the fear of paying too much,’ Vaughan said. ‘That’s a difficult proposition for vendors, all of a sudden, which is why there are houses not meeting their reserves and agents finding a buyer after the auction.’”
From Bloomberg. “Investors in corporate bonds are suffering some of their biggest losses ever, with Russia’s invasion of Ukraine prompting a financial market upheaval that’s fueling expectations for accelerating inflation. Dollar- and euro-denominated investment-grade company notes have lost 5.3% and 3.8% respectively so far in 2022, their worst start to any year in Bloomberg indexes going back at least two decades.”
“Tighter monetary policy is weighing on bonds from London to Tokyo, with U.K. sterling corporate debt losing 5.7% so far this year, and yen bonds also extending a slump. The Bank of England has already raised interest rates, and even Japan’s inflation pulse is showing signs of quickening more than expected. ‘Disorderly conditions are underway in credit,’ Bank of America Corp. strategists wrote in note. ‘Corporate debt is struggling to adapt to a world in which central bank support is suddenly not as free.’”