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- Blackstone Funding Largest U.S. Single-Family Rentals – Bloomberg
Now we will see. Blackstone has already made plenty of gain on rising appreciation, and there's still room for more if they're careful.
Steve Schwarzman's Blackstone Group LP (BX) has spent $7.5 billion acquiring 40,000 houses in the past two years to create the largest single-family rental business in the U.S. The private-equity firm is now planning to sell bonds backed by lease payments, the latest step in turning a small business into a mature industry.
Deutsche Bank AG (DBK) may start marketing almost $500 million of the securities as soon as this week, according to a person with knowledge of the transaction. The debt will include a portion with an investment grade from at least one ratings company, according to two separate people, who asked not to be identified because the deal isn't public.
Securitizing rental cash flow will be "the most innovative" new mortgage-related product since the 2008 financial crisis, which was fueled by creative financing of home loans, according to Laurie Goodman, director of the housing finance policy center at the Urban Institute in Washington.
The new bonds would provide a low-risk opportunity for investors seeking higher yields than the government-backed mortgages that account for about 90 percent of the home-loan market, Goodman said.
- Developers Hot on High End Senior Housing Post-Recession – Senior Housing News
Development of luxury senior housing is not slowing down, despite challenges related to land acquisition and the recent economic downturn.
While the economic recession might have hindered the appeal of luxury options for many prospective residents who saw their home values plummet, those in the business say they are not restricting the pace of their product offerings.
When they say "luxury," they aren't kidding. Check it out.
- More than 25M Americans Still Can't Get a Full-Time Job | The Business Desk with Paul Solman | PBS NewsHour | PBS
Our "Solman Scale" measures the "U-7," adding to the officially unemployed part-timers looking for full-time work and "discouraged" workers — everyone who didn't look for a job in the past week but says they want one.
Yes, our own all-inclusive reckoning of under- and unemployment, "U-7," reported here every month, ticked down to 15.6 percent from 15.7 percent. But that still represents 25,278,000 of our fellow Americans who say they want a full-time job but can't find one.
September's official unemployment rate decreased (good sign), but the number of jobs added was not as high as expected (or needed), which is a reminder that the "U3" (official unemployment) and the payroll figures come from different surveys (the former from households and the latter from employers) and that they can tell very different stories. The Wall Street Journal's Jon Hilsenrath explains:
This worsens a conundrum for Fed officials. They have linked their two signature programs — bond-buying and a commitment to keep interest rates low — to the behavior of the unemployment rate. But the unemployment rate is behaving in peculiar ways. It is coming down as people leave the labor force and exit the tallies of those seeking employment. In normal times, the labor force grows as the population grows, and employment must grow in excess of that labor force growth in order to reduce the unemployment rate. Now, because the labor force isn't growing much, even small employment gains are bringing down the unemployment rate, even though millions of Americans remain parked on the sidelines.
We agree with the use of Paul Solman's "U-7."
- US Unemployment edges down as people continue to leave the workforce | Real-World Economics Review Blog
The unemployment rate edged down to 7.2 percent in September, the lowest level since November of 2008. The Labor Department's establishment survey showed a gain of 148,000 jobs. With modest upward revisions to the prior two months' data, this brings the average rate of job growth over the last three months to 143,000. This compares with an average rate of job growth of 186,000 a month over the last year.
In spite of the September drop in unemployment, the employment-to-population rate (EPOP) remained unchanged at 58.6 percent. This continues the pattern that we have seen throughout the recovery as the unemployment rate falls mainly because workers leave the labor market.
On the whole, this is not a very encouraging report. It reinforces the notion that the economy had slowed in the third quarter. This is before any negative effects of the shutdown.
- Calculated Risk: Weekly Update: Housing Tracker Existing Home Inventory up year-over-year on Oct 21st
This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012 and 2013.
In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.
Inventory in 2013 is increasing, and is now slightly above the same week in 2012 (red is 2013, blue is 2012).
- This year in banking crises | vox
A deposit-insurance scheme is only as good as the sovereign backing it
One of the main objectives of deposit insurance is to prevent bank runs. That was the idea behind the increase of deposit insurance limits across the Eurozone to 100,000 euro following the Global Financial Crisis. However, deposit insurance is typically designed for idiosyncratic bank failures — not for systemic crises where a public back stop funding is necessary. Obviously, the credibility of the latter depends on a solvent sovereign. The case of Cyprus has shown that when the solvency of the sovereign is itself in question, savers lose faith in a deposit insurance scheme. A banking system without the necessary confidence will be hard pressed to fulfil its basic functions of facilitating payment services and intermediating savings. Ultimately, this lack of confidence can only be overcome by a Eurozone wide deposit insurance scheme with public back-stop funding by ESM and a regulatory and supervisory framework that depositors can trust.
- UK signs tax sharing agreement with Jersey and Guernsey | Accountancy Live
This may not sound like much, but it's actually a big deal.
The UK has signed automatic tax information sharing agreements with both Jersey and Guernsey as part of ongoing efforts to tackle offshore tax evasion.
The announcement follows a similar agreement signed between the UK and Isle of Man on 10 October, and means that all the Crown Dependencies have now entered into automatic tax information sharing with the UK. They have also agreed to be part of the G5 multi-lateral information sharing pilot.
- One-Fifth of Today's Mortgage Loans Don't Meet QM Standards
One in five loans originated in today's mortgage market will not meet the requirements of the Consumer Financial Protection Bureau's (CFPB) Qualified Mortgage (QM) rule that goes into effect in January, according to California-based ComplianceEase.
Fannie Mae and Freddie Mac will not guarantee loans that do not meet QM standards in the new year.
That will shrink those GSE's and keep more people renting. However, it will help avoid another housing crash.
- With costs up 40%, California home sales plummet to 1988 levels – OC Housing News
Don't cancel your lease agreement quite yet?
The verdict is still out, and it will be until next April or May when we see the change in activity for the upcoming prime sales season.
Rising prices and stagnant incomes combined with higher mortgage rates are making it more expensive to purchase a property, Yun said at the news conference.
"Affordability is getting hit quite sharply," he said. "Lower affordability will hamper home sales going forward." The group's affordability index fell to 156.1 in August, the lowest since November 2008, from 160.7 the prior month. It reached a record 213.6 in January in data going back to 1989. A reading of 100 means a household making the median income can afford the median-priced house at current mortgage rates.
For Lawrence Yun, that is positively bearish.
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