A report from the Pioneer Press in Minnesota. “Bob Walser has rented out a Randolph Avenue duplex for four years, with the goal of someday selling it for retirement income. He’s worried that a 3 percent cap on rents will take a large bite out of that income. ‘Who wants to buy a guaranteed loser?’ Walser said. ‘I’m trying to set up a long-term investment. I know if I saw a property and saw, ‘oh, your costs are going to up faster than your income stream,’ I wouldn’t invest in the property. Would you?’”
“Andrea Suchy-Shinn owns six rental properties in St. Paul, at least half of them open to low-income tenants subsidized by federal Section 8 housing vouchers, but she’s in the process of selling. Her fourplex on the 1600 block of Charles Avenue could go up for sale soon, ‘I’m right now not breaking even,’ said Suchy-Shinn.”
From Pacific Business Journal. “The number of residential and condominium sales on both Hawaii Island and Kauai declined in January compared to the same month in 2021. The median residential sale price declined $111,000, from $1,036,000 in January 2021 to $925,000 – a decrease of 10.71%. Median condo prices also dropped $59,000, or 10.75%, January over January from $549,000 to $490,000.”
The Idaho Mountain Express. “The Hailey Planning and Zoning Commission on Monday approved the first draft of a housing ordinance. P&Z Commissioner Richard Pogue said he was ‘stunned’ and disappointed ‘that 22% of [Hailey’s] housing stock is vacant.’ ‘People in San Francisco … are buying just because they can afford it. How do you solve this issue?’ he asked.”
From Pique News Magazine in Canada. “Threatening to leave Whistler is as much a local tradition as plaid shirts and complaining about pay parking. But these threats don’t seem as hollow taken in the context of the last two years. Here’s where I should also mention a troubling stat I hope weighs heavily on our local decision-makers: as of 2016, our most recent census, 61 per cent of the town’s private dwellings were empty or temporarily unoccupied for a chunk of the year.”
The Irish Times. “A narrative has taken hold in certain quarters in the housing crisis that says scores of apartments in high-end build-to-rent (BTR) schemes are being left vacant by their developers, who are refusing to drop prices to fill them. ‘Some might say [that] while four out of every five units being occupied is certainly better than none, if replicated across the city and country – and continued into the future – this would result in thousands of homes being left empty, at a time when Ireland desperately needs new rental homes,’ states Ronan Lyons, associate professor of finance.”
From Teesside Live in the UK. “An inquiry is set to examine what powers Scarborough Council has to put limits on new property sales in Whitby for second homes or holiday lets. The Whitby Civic Society spokesperson said: ‘We’ve been concerned for some time over the growing number of holiday lets and second homes in the town. We don’t object to holiday lets and second homes as such, but to the sheer number of them. On 2018 figures, we estimate that over 25% of the local housing stock in Whitby was taken up by second homes and holiday lets.’”
From NL Times. “Amsterdam wants to force landlords to lower rents to battle long-term vacancies. The proposal to oblige owners to get their homes occupied as soon as possible will be under public consultation from February 17, the city said in a press statement. ‘We are in a housing crisis, and it is impossible to explain that houses are unnecessarily empty because, for example, the rents are too high or because owners wait too long with renovations,’ Housing alderman Jakob Wedemeijer said. ‘With this, we can force owners to rent out homes for a market-based rental price. If there is no demand for expensive rental properties, then the rent simply has to come down.’”
The Associated Press. “A Chinese real estate developer that is struggling under $310 billion in debt is promising to deliver 600,000 apartments this year, a newspaper reported. Evergrande Group has left financial markets guessing at its status since the developer warned in December it might run out of cash. Its struggle to avoid default alarmed investors, but Chinese officials say any financial impact can be contained.”
“Evergrande says it has 2.3 trillion yuan ($350 billion) in assets, but the company has struggled to turn that into cash to pay bondholders and other creditors. The company had ‘almost no capital inflow’ since September, said Xu Jiayin, the Evergrande founder. He previously has said potential buyers were put off by news reports about its financial struggle.”
The Saturday Paper. “Some years ago, I was asked to comment on a draft of a commissioned history of the Reserve Bank of Australia. My overarching comment seemed to catch the author by surprise: ‘You guys seem to believe that you actually controlled inflation.’ This was coming out of the era where the RBA had created the impression they could fine-tune inflation, colloquially speaking. To the public’s mind, the governor sat up there in his tower at the top of Martin Place with a mysterious black box on his desk, his hand hovering over two knobs, one that could move the cash rate up by about 25 basis points at a time and the other that could drop the inflation rate by a desired amount.”
“If only. There is no doubt that inflation was brought under control through the 1990s, but there is a real debate about just how much of that was due to the management of monetary policy compared with the impact of a host of other factors including, importantly, Chinese manufacturing flooding the world with ever-cheaper product. Undoubtedly what became the RBA’s obsession with bringing down inflation did probably contribute by lowering inflationary expectations significantly through constant jawboning, but the central bank was not the principal driver.”
“The RBA has become its own worst enemy in what is a potential housing crisis of its own making. Having repeatedly created the expectation that it wouldn’t seek to increase the cash rate until about 2024, it is now contemplating an earlier increase in rates, maybe even this year. Indeed, some market analysts are suggesting rates may be increased three or four times by the end of this year.”
“At its worst this could be a bloodbath for the housing sector, with house prices actually falling, eroding the equity many households believed they had built up in their homes, resulting in banks calling in some housing loans.”
From Bloomberg. “The Federal Reserve faces a growing risk of making a policy mistake, tipping the economy into a recession, as it confronts decades-high inflation that’s proving more persistent and broad-based than policy makers expected. ‘When you’re wrong in one direction and you’re painfully wrong, you’re going to have to end up with too much heavy lifting to go in the other direction,’ former Fed Governor Lawrence Lindsey, said of what he sees as the Fed’s delay in recognizing and responding to the budding inflation problem.”