A report from Investor Place. “Opendoor Technologies just released its Q4 financials, including its full-year 2021 results. It is likely to stay down as long as the company keeps digging itself into a hole. The $5.8b billion in home purchases was covered by the debt raised – not by any profits. Remember, the company lost a ton of money both on a GAAP and adjusted basis. Therefore, the bottom line is that all the company did was leverage itself.”
The Los Angeles Times in California. “The mega-mansion known as ‘The One’ has become something of a Rorschach test for L.A.’s luxury real estate scene: Some think it’s the ultimate trophy home, others are convinced it’s a giant white elephant clad in marble and glass that one local broker has sarcastically dubbed ‘100,000 square feet of drywall.’ Listing agent Rayni Williams said the hope is that the prospective overseas buyer will bid at the auction, which doesn’t have a reserve, or minimum bid price.”
“To call the auction a total success, The One must set the state record given that it carries some $191 million in total debt, largely in loans from L.A. billionaire Don Hankey and other property lenders, according to Bankruptcy Court records. Otherwise, in one of the world’s most expensive and hot real estate markets, where it’s been hard not to sell a home for a profit, some of the industry’s biggest names could take a bath.”
From Mortgage Grader. “Can the condo world live without mortgage giants Fannie Mae and Freddie Mac and their more affordable financing terms? Fannie and Freddie rightfully want to know if America’s condo complexes have deferred maintenance or structural safety issues. To that end, the agencies on Jan. 1 and Feb. 28 instituted new questionnaires for certain applicants regarding the structural integrity of the condo community and whether any code violations are anticipated.”
“‘The questionnaire is draconian. It’s freaking out boards of directors and managers,’ said Adrian Adams, managing partner of law firm Adams-Sterling, who advises and represents condo boards. Last week, Community Associations Institute sent a survey to its condo and co-op boards and managers. Early results from 48 respondents indicate 36.8% of mortgage applicants in their HOAS were denied credit because of the new Fannie, Freddie questionnaire. Separately, 31.5% of borrower closings were delayed, according to survey results. Seven of the 48 HOA respondents were from California.”
“Mortgage lenders are in the business of making mortgages. Every lender I’ve interviewed (all off the record) about this new HOA issue is hopping mad. They complain Fannie and Freddie are providing little clarity and direction. They are leaving it to subjectivity and underwriter judgment when they receive these wonky HOA responses.”
The Globe and Mail in Canada. “Today, Calgary renters have more choice than ever. According to CMHC data, more than 2,400 new purpose-built rental units have become available since 2017 in the city’s downtown neighbourhoods; and about 1,650 units are currently under construction. But these units no longer target the low end of the rental market. Today, purpose-built rental buildings have amenities comparable to those available in higher end condos. This new rental stock is affecting some Calgary landlords. ‘It’s a very saturated and it’s a very competitive market,’ Shamon Kureshi, CEO of Hope Street Management says, adding that ‘… there’s a huge supply but no demand.’”
“Shane MacDonald is a Calgarian who owns property in the city but who currently lives in Montreal. He owns a unit at Union Square, a high-end condo tower completed in 2009 in Calgary’s Beltline. But despite being located in a relatively new building and having high-quality finishes, Mr. MacDonald’s one-bedroom condo has been vacant since November. MacDonald is currently asking $1,775 a month for the unit, which includes parking and heating).”
“‘I was getting about 100 views a day,’ he says about his listing. ‘But nobody was calling me, then I dropped the price – I’ve dropped it twice now. If I can’t rent it for $1,700 or above, then I start to think about selling the unit,’ Mr. MacDonald says. ‘Otherwise I’ll be losing money every month.’”
The Daily Telegraph on Australia. “Mortgage holders in some parts of Sydney will need to fork out thousands of dollars more each month once the cash rate returns to pre-pandemic levels, a new analysis has found. The results were varied, with borrowers in suburbs such as Manly, Vaucluse and Rose Bay likely to pay about $2,000 more each month. It followed the results of a national survey commissioned by the comparison site which found 80% of borrowers were worried about interest rates rising, with seven per cent believing they would need to sell their property once this occurred.”
“Mozo spokesman Tom Godfrey said it was time for borrowers to start stress-testing their ability to make higher repayments. ‘With fixed interest rates continuing to rise and speculation intensifying around when the banks will hike variable rates, many borrowers will be in for a shock before the year is out,’ he said. ‘The last time the cash rate was 1.5 per cent in May 2019, Mozo’s database shows the average variable interest rate 4.32 per cent which is significantly higher than the 3.06 per cent it is today. While some suburbs might be harder hit by a rate rise than others, no matter where you live, the pain you feel will ultimately come down to your servicing capacity.’”