News Alerts, Aug. 31, 2013, Morning Edition, 3 New Articles, Real Estate +, Don't Miss Them

Linking ≠ endorsement. Enjoy and share:

  1. China's risky mortgage lending is tacking a credit bubble onto a real estate bubble – Quartz

    …official mortgage lending data doesn't capture the entire debt picture for China's new homeowners. Excessively high housing prices are making it hard for most to cough up the required 30-40% down payment. As a result, banks [are] becoming "very creative in helping consumers" make mortgage down payments, says Junheng Li, head of research at JL Warren Capital.

    One increasingly common scheme (link in Chinese) involves an informal version of "reverse mortgages," which aren't legal in China. When a prospective buyer can't pay the down payment, banks allow the buyer's parents to take out a loan using their home as collateral in order to generate the cash.

    Because these loans aren't technically allowed, they sometimes "take the form of auto or other types of discretionary consumer loans," says Li, whose forthcoming book, Tiger Woman on Wall Street, argues that China suffers from a housing bubble. This has been going on for a while, she says, particularly in big cities.

    In other words, banks are exposing themselves to more risk than their balance sheets reflect. In using improvised reverse mortgages, banks are lending to a set of people deemed too risky by Chinese regulators. That's pretty much the definition of "sub-prime lending."

    What's more, the majority of home loans in China have variable interest rates (pdf, p.13). As the government shifts from monetary to fiscal stimulus and the slowing economy causes businesses to default, cash is starting to dry up. Unless the government intervenes, that will cause interest rates to rise for homeowners— the very thing that triggered the US housing collapse. This isn't just theoretical; in the wake of June's credit crunch, some banks have already raised mortgage rates by 10% (link in Chinese).

    The article does outline ways in which China's lending standards are tighter than they were in the US before the US housing crash, but whether we know enough about everything shady going on over there in China or not is a huge question. We had a hard time finding out the shady practices going on right here in America and still don't know the whole of it.

    Read the source article … http://qz.com/118282/chinas-risky-mortag e-lending-is-tacking-a-credit-bubble-ont o-a-real-estate-bubble/


  2. Stuck Working Part-Time? Blame the Economy – Real Time Economics – WSJ

    It's tough finding a job these days. It's even tougher to find one that's full-time.

    More than four years after the recession ended, nearly a fifth of American workers are part-timers, well above normal levels. More than 8 million people are working part-time because they can't find full-time jobs. That's given rise to fears of deep, structural shifts in the U.S. labor market due to technology, globalization or perhaps the new health care law, which will require companies to provide health insurance to full-time employees.

    But a new paper from the Federal Reserve Bank of San Francisco argues there's a simpler explanation for the rise of part-time work: the weak economy.

    Part-time employment is generally a mirror-image of the overall economy. When times are good, people pick up more hours, and more of them qualify as full-timers, which the Labor Department typically defines as anyone working 35 hours or more. When the economy sours, more people end up working part-time.

    Let's hope things pick up enough to be able to put the unemployed and underemployed to work in solid, full-time, high-paying jobs.

    Read the source article … http://blogs.wsj.com/economics/2013/08/2 6/stuck-working-part-time-blame-the-econ omy/?mod=WSJBlog


  3. City tech sector to expand by a quarter this year

    28 August 2013 London, UK – Knight Frank Research expects the technology media and telecoms (TMT) firms that are transforming London's the City district to acquire 1.6 m sq ft of office space in 2013, a 23% increase on last year. In 2003, TMT office take-up in the City was 454,000 sq ft. 2013 will mark the third consecutive year that TMT firms have been the largest source of office demand in the City. Moreover, activity is spreading from fringe locations, like Shoreditch and Farringdon, into the City Core and Holborn. These are districts that historically have been linked to the traditional City industries of finance and law.

    Read the source article … http://www.knightfrank.co.uk/news/city-t ech-sector-to-expand-by-a-quarter-this-y ear-01917.aspx


If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.

Subscribe