A report from Mortgage Grader. “Why is Freddie Mac throwing out automated appraisals for certain refinances that have seemingly worked well for five years? In June 2017, Freddie introduced refinance appraisal waivers on eligible properties, expanding the program to purchase loans by September of that year. On Wednesday, March 16, the same day the Federal Reserve raised its benchmark interest rate, mortgage giant Freddie Mac announced it will no longer allow these appraisal waivers, called an automated collateral evaluation (ACE), on cash-out refinances and certain ‘no-cash-out’ refinances, effective July 17.”
“Think of this pivot as a canary in the housing coalmine. Housing costs have been rising for a decade. The pandemic in two years pushed prices to consecutive, record highs. As interest rates shift upward after years of record lows, will Freddie’s predictive model struggle to adjust in a downward market? Waivers also aren’t as reliable when you’re worried about prices potentially sinking. If I had to guess, Freddie likely wants to slow down lofty equity tapping.”
The Coast News in California. “As San Diego prepares to implement its newly-approved 1% cap on short-term vacation rentals by the beginning of next year, many rental owners will face a choice of either renting out their units long-term, selling their units and cutting their losses, or looking to other cities without limits to start their business fresh. Carmel Valley realtor Megan Eskey noted that with the number of short-term rentals dropping out of the market, many of those units would most likely be up for rent or sale. That many homes going back to the market is significant, she said.”
“‘The numbers are so low per city in terms of how many houses go on market per month,’ she said. ‘If you suddenly or gradually bring thousands more properties forward for long-term rentals or homeowners, that would make a difference.’”
From Business Insider on Illinois. “Michael Jordan’s enormous house in Chicago is still on the market after 10 years. Jordan has tried to sweeten the pot by cutting the price nearly in half and throwing in a complete set of Air Jordans with the purchase of the house. He pays more than $100,000 in annual property taxes. The house was originally listed for $29 million and has every bell and whistle you can think of. The price on the house has dropped several times and is now going for $14.9 million, or about $265 per square foot — that’s a far cry from the original price of $517 per square foot.”
“Jordan tried to auction the house in 2013, but the minimum bid of $13 million was never met. One problem is that Jordan may feel his celebrity status adds value to the house, but, according to Stephen Shapiro of the Westside Agency, people do not pay more for a house just because somebody famous owned it. ‘But you know who tends to think a property is worth more because a celebrity lived there?’ Shapiro said. ‘The celebrity trying to sell it.’”
From AZER News. “Prices on the secondary real estate market in Baku continue to decrease, the Director of the consulting company MBA Group Nusrat Ibrahimov told Trend. According to him, interest in apartments in old buildings is gradually declining. ‘The sale of apartments in old houses has become a problem and in this regard prices have been falling for three consecutive months. Mortgages are not issued for apartments built before the 1970s. At one time, apartments in ‘Stalinka’ apartment buildings (built in 1950s) were the most expensive, but today they either do not sell, or are sold with great difficulty. Buyers are looking for apartments only in new buildings. Due to a decrease in interest in apartments in the secondary market, prices are reduced,’ Ibrahimov said.”
From News.com.au. “As interest rates are predicted to rise, new heat maps are showing the suburbs most in danger of mortgage stress, with some of the wealthiest suburbs set to be among the hardest hit if rates go up by just 1 per cent. The data has found that already up to three-quarters of homeowners in some parts of Australia are facing financial stress. The heat maps have revealed that the worst-hit areas for mortgage stress include western Sydney, the NSW Central Coast, parts of Brisbane and outer Melbourne – with a warning that when interest rates rise, it will only add to the problem.”
“Kate Colvin, spokeswoman for advocacy group Everybody’s Home, said while outer metro areas of Sydney tended to have the most financial stress, there were affluent suburbs that were also in trouble. ‘Outer metro areas are where lower income households tend to be purchasing a home and are geared up to the eyeballs to do so, for example in Sydney in outer metro areas, we have more than 70 per cent of mortgagees in financial stress in Macarthur and Fowler,’ she told news.com.au. ‘These are people who have less than 5 per cent of income left after paying ordinary costs and if interest rates go up then they will be [in] a really tight position to manage that cost increase.’”
From Stuff New Zealand. “Andy Thackwray has been investing in property for 20 years, and on Friday he watched his daughter’s Whenuapai property join a dozen others as it failed to sell under the hammer. Only two of the 14 properties at the Barfoot & Thompson Auckland auction sold, with the rest being passed in. Thackwray doesn’t mince his words – he says the market is about to tank, and auctions have had their day.”
“He says the family decided to sell by auction because the market had not yet turned when his daughter’s property was first listed. His advice to those selling today is to try and sell quickly. At another of the company’s Auckland auctions on Tuesday, seven out of nine properties were passed in. A tenth was withdrawn before the session began. Such scenes are a world away from what played out in the same auction room last year, where bids came fast, expectations were smashed, and one central Auckland property without a toilet infamously sold for more than $2 million.”
“University of Auckland associate professor Mike Lee specialises in buyer behaviour and consumer psychology. He describes auctions as a multiplier of buyer sentiment – when the market’s running hot and the FOMO (fear of missing out) is running high, an auction will increase the heat as buyers compete. When the market is falling as it appears to be currently, it works in reverse, Lee says, and can throw cold water on a property, devaluing it in buyers’ eyes and possibly emboldening them to make lower offers.”
“‘They (auctions) show you really clearly when no-one is interested, and no-one is willing to take a chance, or no-one thinks it’s worth what the seller thinks it’s worth.’”
From Bloomberg. “China Evergrande Group and its other units were suspended in Hong Kong Monday pending an announcement containing ‘inside information,’ according to exchange filings that didn’t elaborate further. Elsewhere, Ronshine China Holdings Ltd. won’t meet a March 31 deadline to publish audited full-year results after it became the latest property firm to announce the resignation of its auditor. Ronshine’s stock and bonds plunged.”
The South China Morning Post. “Chinese Estates Holdings, a major ally of heavily-indebted Chinese developer China Evergrande Group controlled by the family of fugitive property tycoon Joseph Lau Luen-hung, swung to a loss last year as China’s housing market soured. The Hong Kong developer, chaired by Joseph Lau’s son Lau Ming-wai, 41, reported a loss of HK$3.5 billion (US$447 million) for 2021, having recorded a profit of HK$622.2 million the previous year. The company said in a filing to the Hong Kong exchange on Monday that the loss was mainly due to a decline in dividend income from China Evergrande shares, and losses from China Estates’ equity and bond investments.”
“‘It is expected that the group’s investment properties will continue to face numerous challenges in the short run,’ the company said in the filing.”