A report from the Australian Financial Review. “Dixon Advisory’s troubled US Masters Residential Property Fund, or URF, is set to be liquidated after its parent E&P Financial accepted an offer to sell ‘substantially all’ of its residential property assets in a $US507 million ($673 million) transaction. The sale agreement of the portfolio of houses and apartments in the New York and New Jersey region has been struck with US real estate firm Brooksville at an 11 per cent discount to the book value at December 31, 2021, and implies a realisation that is 38 per cent below Friday’s closing share price of 34¢.”
“In early trading on Monday, the ordinary units plunged 43 per cent to 20¢, which is below the 22¢ distribution implied by the sale price. It sought to take advantage of distressed residential property prices in New Jersey and a strong Australian dollar. But the fund took on more debt as it expanded its portfolio to $1.4 billion. ‘At the end of the day it’s been a flawed model, they have overcapitalised their properties and had far too much debt,’ said activist investor David Kingston.”
From Bloomberg. “U.S. homebuyers already struggling to afford soaring prices must now contend with mortgage rates that are rising at the quickest pace in almost three decades. David Goldberg, vice president of Mid-Island Mortgage Corp. on New York’s Long Island, said he’s losing trust with clients because he’s had to go back so many times to tell them that rates jumped.”
“One couple he works with, a schoolteacher and a mechanic, started looking for a home in Suffolk County in early February. They’ve lost a few bidding wars, and since starting their search, their estimated monthly payment climbed nearly $200. Even so, they were ready to make another offer, for a house priced at $500,000. Last week, Goldberg had to tell them they were disqualified because their income was no longer high enough to cover their debt costs. The couple is one of many that have been sidelined, forced to continue renting.”
“‘It’s a runaway train,’ Goldberg said of the skyrocketing rates. ‘You give a quote to a client early in the day and hang up the phone with them. That offer may not be available anymore.’”
From 6 Sq Ft on New York. “Two years after the start of the coronavirus pandemic, Bronx neighborhoods are leading the city in mortgage delinquency rates, according to a the Center for NYC Neighborhoods. Plus, the city’s majority Black neighborhoods were most at risk for foreclosures, with these ZIP codes having an average of 8.48 percent of homeowners who had failed to make their mortgage payment for more than 30 days. According to the nonprofit organization, which promotes affordable housing in New York, 17 out of 25 ZIP codes in the Bronx, or about 70 percent, had delinquencies above 4.17 percent, with Mott Haven and Hunts Point having a rate of 13.5 percent. The city average is roughly 4 percent.”
“In Brooklyn, 20 out of its 37 zip codes showed above-average mortgage delinquency, with eight zip codes having a rate above 10 percent. Nearly half of Queens ZIP codes had an above-average rate, with the Queens Village, Jamaica, and Edgemere neighborhoods possessing leading rates above 9 percent.”
The LA Sentinel. “‘As of January, there were 721,000 families who owe more than $3.3 billion in back rent. People usually think this a problem solely for renters, but it’s more about mom-and-pop landlords who actually make up a large portion of homeowners in California,’ explained Eric Johnson, an information officer with the Marketing and Communications Division of the California Housing Finance Agency. Johnson continued, ‘These are owners of duplexes and quadplexes who rent out their properties in California and rely on rent to upkeep their homes for renters as well as make up their mortgage payments.’”
The Desert Sun in California. “A typical home value in Joshua Tree is now $414,172, up from $244,942 before the pandemic. The 2020 census counted 6,489 people in Joshua Tree, a 12.5% drop from 7,414 residents in 2010. And while some contend Joshua Tree has always been a haven for second homes, the percent of vacant units — a category that counts housing units that aren’t used as a primary residence, including short-term rentals — increased by 33.6% between 2010 and 2020.”
“Jenn Gladysz, founder of the short-term rental company Cocoon, which manages about 40 short-term rentals in the high desert, said a lack of affordable housing production is an issue across the nation. ‘I think that is more of the problem than short-term rentals. I also think the short-term rental market is becoming saturated here. It’s going to start to regulate itself,’ she said. ‘People have jumped into this market, and they think they’re going to make a certain amount of money. And they’re not necessarily. If they don’t have a special and unique place, it might not do as well as they thought it would.’”
“Breana Violanti, a lifelong Morongo Basin resident who maintains a map of short term rentals, called the culture perpetrated by short-term rentals and businesses now owned by people from Los Angeles or other areas a ‘hipster lie about our community.’ ‘There needs to be limits, there’s no reason that in a town with 3,000 homes that half of them should end up as AirBnbs,’ said Violanti. Absent a cap on short-term rentals set by the county, Violanti hopes the saturation point is coming soon — an idea that was echoed by short-term rental owners and managers themselves.”
“‘Short-term rentals aren’t for everybody. I think some people have some pie-in-the-sky idea that they’re going to buy these houses and make tons of money, but it’s not tons of money, you make more money than you would as a long-term rental, but it’s also a lot more work and a lot of people are disillusioned by the amount of work that it is,’ said Sati Ah, who has owned short-term rentals in Joshua Tree since 2014.”
From ABC News in Australia. “After Jess Clarke signed the contract on her first home she was filled with regret. It’s not that she didn’t like the house. But the process had just moved so quickly, she barely had a chance to think about it. There weren’t many suitable properties on the market in Armidale, New South Wales, and the ones that were around were getting more and more interest from investors out of town. So, when a two-bedroom home popped up in her price range, she pounced.”
“‘I put in an offer the afternoon of my second inspection,’ she says. ‘It still blows my mind that I basically looked at something twice and then thought ‘oh yep, that’s worth my entire life savings’. One year on, however, she’s happy where she is. She doesn’t regret buying the house, but she does have regrets about the process. ‘I wish I’d thought a little bit more about things and looked at a few more places. It really felt like this was the only place that I could get and I wouldn’t get one at all.’”
From Stuff New Zealand. “Prices fell in 154 suburbs around the country in the three months to February, with 12 down by over 5 per cent, CoreLogic’s latest mapping analysis reveals. Each of the 154 suburbs had price drops of over 1 per cent, but 94 of them were in Auckland, while 19 were in Dunedin, 14 in Lower Hutt, six in Hamilton, five in Kāpiti and four in Porirua.”
“All the suburbs with price falls of over 5 per cent were in Auckland, and a further 12 suburbs, also in Auckland, had falls of over 4 per cent. Muriwai had the largest quarterly drop, with prices down 10.3 per cent to a median value of $1,337,650. In dollar terms, that equated to a fall of $153,600. ‘It has reached a clear turning point, as stretched affordability, higher mortgage rates and reduced credit availability cause growth rates to slow, or turn negative, in many areas of the country,’ said CoreLogic chief property economist Kelvin Davidson.”
From Dow Jones. “Guangzhou R&F Properties Co. shares traded sharply lower in Hong Kong after the company flagged a billion-dollar loss for 2021 and said it would miss a deadline for releasing financial results by up to a month.”