A report from Yahoo Finance. “Much of the blame rests with the Fed for ‘way overstaying their welcome with [quantitative easing] and zero rates and badly misreading inflation that they are now being forced to play catch up with,’ said Peter Boockvar, chief investment officer for Bleakley Advisory Group, who’s a relentless critic of Fed monetary policy. ‘The other sin, so to speak, was by waiting this long to tighten, they let asset prices further inflate, creating a higher peak at which they inevitably fall when the tightening intensifies,’ he added.”
From CNBC. “The average rate on the popular 30-year fixed mortgage hit 3.7% Tuesday morning, according to Mortgage News Daily. That is the highest since early April 2020 and now 83 basis points higher than the same time one year ago. Mortgage rates, ‘would be higher, but lenders are compressing their margins to compete in a rising rate environment. Some will be at 3.625%, but many are already up to 3.75%,’ said Matthew Graham, COO of Mortgage News Daily.”
“Lenders are losing vast amounts of refinance business, which had been booming just a year ago when rates were much lower. Applications to refinance a home loan were down 50% from a year ago, according to the most recent weekly survey from the Mortgage Bankers Association.”
The Orange County Register. “Imagine you can afford a $2,500 monthly mortgage payment. Two weeks ago, that would be a $576,619 loan. Last week, that amount came down to $560,214 or a 2.85% cut in buying power. Sound small? Nope! It’s actually the 23rd largest percentage drop since 1971, bigger than 99% of all one-week periods to date. House shoppers will have to borrow less or dig deeper into their household budgets for mortgage payments. And sellers (and industry cheerleaders) should note this change.”
From Bloomberg. “The fastest inflation in four decades has reached an ‘excessive’ level, in part because of stimulative monetary policy used to counter the economic consequences of the pandemic, said Howard Marks, co-founder of Oaktree Capital Management. ‘I am worried about inflation. Inflation is excessive,’ Marks said in a Bloomberg TV interview. ‘Higher inflation means higher interest rates, higher interest means lower asset prices.’”
From Bisnow New York. “A series of Manhattan hotel sales at prices well below pre-pandemic valuations — in some cases at a significant loss to the seller — have made headlines in recent weeks and raised questions about the future of New York’s hospitality industry. Private sales jumped from just 20% of transactions in 2019 to around a third of sales last year, according to Colliers. This shifting mix of capital sources played a significant role in reducing per-room pricing across Manhattan from around $700K per room at the height of the cross-border capital influx in 2015 and 2016 to around $250K per room in 2021.”
“‘The international money really was what drove the pricing in New York,’ said Derek Olsen, managing director at hotel asset manager CHM Warnick. ‘Without that international money, I think that’s another reason why the prices have dropped and why you’re seeing some of these prices per room that you’re seeing right now.’”
From TC Palm in Florida. “The engineer’s report was clear. Barclay Beach Club was in trouble. The Fort Pierce oceanfront condo’s floor-to-ceiling windows were leaking. Railings were letting water seep into the concrete. Balconies were in bad shape. Tony Lennie, one of 80 owners of the 11-story, 57-year-old building, knew there would be a big obstacle to hurdle. The project would cost $1.7 million, with each owner responsible for about $21,000. Many were seasonal retirees with stagnant incomes.”
“‘I kind of liken it to the five stages of grief, with the first stage being denial,’ said Lennie, the board president. ‘That’s exactly what happened. A lot of the people who live in condominiums in Florida are there for a good time, they’re not there for a long time. They’re kind of hoping they can maybe get out before … the real expenses come due.’”
Two reports from the Globe and Mail in Canada. “New condo and detached house development in major cities helped push Canadian home building to a record high last year. The number of housing starts rose 21 per cent to 244,025 year over year, according to Canada Mortgage and Housing Corp., marking the highest level of new home construction on record. The unprecedented levels of construction are taking place as home prices spiral upward. The typical price of a resale home in Canada is up 43 per cent in two years, according to the Canadian Real Estate Association’s home price index.”
“Values have jumped across most of the country, especially in less populated regions in B.C. and Ontario. In places such as Hamilton, Guelph, Cambridge and Brantford in Ontario, the home price index is at least $300,000 higher than the end of 2019.”
“Buyers in the Toronto-area real estate market appear to be moving with great speed this January as they pounce on the very rare listings that appear. For first-time buyers, Davelle Morrison, broker with Bosley Real Estate Ltd. recommends that they forgo their ‘Champagne tastes.’ ‘Accept, like and embrace the properties that are available to you on your beer budget,’ she says.”
From Radio New Zealand. “Potential home buyers are being warned they could face their pre-approvals being declined or withdrawn for months to come. Home loan pre-approvals are an acknowledgement from the bank on how much hopeful buyers can spend. But as Loan Market mortgage advisor Bruce Patten explains it’s far from a guarantee – particularly for those now with less than a 20 percent deposit.”
“‘There were a couple of banks prior to Christmas that withdrew some existing pre-approvals, we’re hearing stories that some other banks may withdraw their pre-approvals. That will be based on how many of their clients that are pre-approved are purchasing at the moment, so if they are close to their cap they are going to have to withdraw their pre-approval if the person hasn’t purchased,’ he said.”
“Economist Tony Alexander told Morning Report: ‘Overall remember that housing markets move in cycles and we’ve seen the mother of all booms over the past two years. It’s pretty much ended, so maybe take things a bit more calmly for 2022.’”
From Channel News Asia on Singapore. “‘The market caught a chill after the Government imposed cooling measures on Dec 16, 2021,’ said Huttons Asia senior director for research Lee Sze Teck. OrangeTee & Tie’s senior vice president of research at OrangeTee & Tie Christine Sun had a similar sentiment.: ‘New home sales declined on the back of a double whammy of fresh property cooling measures that took effect on Dec 16 and the year-end holiday season when sales activities typically slow down.’”
The Sixth Tone on China. “Shenzhen’s ‘plummeting rents’ trended online last week after a local media outlet reported that the city’s rentals had dropped to a four-year low. The average per square meter price for an apartment in the southern tech hub known for its skyrocketing rentals was just 72 yuan ($11) last year, news magazine Time Weekly reported. Several media outlets, including Time Weekly and state broadcaster China Central Television, reported that landlords slashed rents by up to 40%.”
“A search on a leading real estate website Lianjia showed that nearly 41,000 apartments in Shenzhen are vacant, compared with just over 14,000 in Shanghai and around 30,000 in Beijing. But some landlords said they are unwilling to slash their prices. An apartment owner surnamed Sun in Nanshan District said her two-bedroom property has been vacant for nearly two months, but remains determined her tenants pay 7,500 yuan a month.”
“‘It’s hard to imagine people are willing to cut their offers by 40% — that’s a lot,’ she told Sixth Tone. ‘There have been very few sincere clients. Those who visited my apartment bargained aggressively. They asked me to cut it by more than 1,000 yuan. I’d rather wait and try my luck after the Lunar New Year break.’”