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Frances Coppola, a former banker, rips the notion that a real housing recovery is underway in Britain.
…there is actually very little recovery in the London residential housing market. The 8.1% increase in house prices is due to inflows of hot money from overseas residents looking for safe investments (helped by the relative weakness of sterling), and a booming buy-to-let market due to high rents.
Would someone please explain to me why it is such a great idea for the Government to encourage first-time buyers to take on bigger mortgages at higher loan-to-value at a time when interest rates are at unprecedentedly low levels? The current low mortgage rates are by no means fixed in stone: Funding for Lending has reduced rates for borrowers, but there is no guarantee that they will remain low. Has no-one learned from the American housing crash of 2007, in which people with adjustable-rate mortgages suddenly found that the rate adjusted by far more than they could afford, and were forced into default? Where are the wage increases that support this increase in debt?
Is the UK government encouraging first-time buyers to take on adjustable-rate mortgages?
In the US, adjustable-rate mortgages have been statutorily altered since the crash so that they can’t legally be adjusted upwards nearly as much as they used to. For someone who knows for sure he or she won’t be in a property long, an ARM might make sense, but we advise great caution. Do your due-diligence. Research thoroughly what’s on offer, and be sure to think about worst-case scenarios.
It might be better to rent, especially if you factor in closing costs.
- What Construction Boom? Beijing Running Out of Office Space – China Real Time Report – WSJ
Five years on, with barely a pause in its breakneck growth, the capital [Beijing] appears to have run out of office space.
China is in the midst of an orgy of building, with 5.7 billion square meters of office space under construction, according to the National Bureau of Statistics. Far away from the capital, smaller cities like Zhengzhou, Changsha and Nanchang are building whole new commercial districts.
- Surprising foreclosure hot spots
In many of these cases, early government intervention aimed at helping these markets is now coming back to haunt them, says Daren Blomquist, RealtyTrac’s spokesman.
“Foreclosures are continuing to boil over in a select group of markets where state legislation and court rulings kept a lid on foreclosure activity during the worst of the housing crisis,” he said.
But there were some bright spots: States like California, Illinois, Pennsylvania and Georgia are seeing foreclosure filings that are nearing levels not seen since before the housing bust.
“The foreclosure boil-over markets are becoming fewer and farther between,” said Blomquist.
- The homebuilding industry’s increasingly desperate attempts to preserve the HMID » OC Housing News
Scathing commentary against the US Mortgage Interest Deduction:
Like any industry that enjoys an undeserved government subsidy, the homebuilding industry is fighting to keep it. The home mortgage interest deduction does little to increase home ownership rates, particularly among low wage earners, but it does inflate housing prices, especially where high wage earners live. Homebuilders equate high house prices with greater profits and more homebuilding activity, so they are fighting to keep it despite the fact it is very costly to the US taxpayer and does little to boost home ownership rates.
Supporters of the home mortgage interest deduction are very worried that Congress will curtail it in the debate over comprehensive tax reform. The National Association of Homebuilders is becoming increasingly vocal — and increasingly desperate — in their attempts to justify this subsidy.
- California: Defaulted borrowers can challenge RMBS assignment | 2013-08-12 | HousingWire
By a California appellate court’s admission, California homeowner Thomas Glaski’s tale of his Bank of America (BAC) foreclosure is “somewhat confusing and may contain contradictions,” but he still has the right to challenge the claim of transfer of his mortgage into a residential mortgage-backed securitization.
The decision, which was delivered by the Fifth Appellate District Court of Appeal in California, overturns an earlier ruling in favor of Bank of America. The ruling said Glaski could effectively prove the title chain of his mortgage broke upon transfer into a trust for securitizing. And therefore, he can challenge the foreclosure.
One wonders how many others were subjected to this same type of title-chain breakage.
- How much does bad Chinese data on real estate prices matter?
The excellent Christopher Balding has the scoop:
Baseline Chinese economic data is unreliable. Taking published National Bureau of Statistics China data on the components of consumer price inflation, I attempt to reconcile the official data to third party data. Three problems are apparent in official NBSC data on inflation.
I find that using conservative assumptions about price increases the annual CPI in China by approximately 1%. This reduces real Chinese GDP by 8-12% or more than $1 trillion in PPP terms.
Problems with official Chinese government stats have been roundly identified.
For the first time this year, buyer traffic dropped below agents’ expectations, and “the next few months will be crucial to determining whether this is just a pause or something more,” the Goldman Sachs report notes.
- Why Are Walmart Stores Underperforming? Blame Their Terrible Wages – The Daily Beast
Is this another reason why so many people have no choice but to rent and will continue to have to do so?
A very harsh critique of Walmart’s reported shortsightedness and the downward sloping plateau they may have created for themselves:
The biggest problem in the economy is the refusal of companies, now in the fifth year of this expansion, to boost wages broadly. The rich are continuing to do well. But the typical worker just isn’t getting a meaningful wage. According to the Bureau of Labor Statistics, average hourly earnings for workers in the private sector have risen by a scant 1.9 percent in the past 12 months. Quarter after quarter, corporate America collectively puts up big profits, buys back shares, rewards executives handsomely, pays dividends—and then effectively freezes wages. And then executives at stores that cater to the bottom half of the income ladder wonder why nobody shows up. “Where are all the consumers?” read a plaintive email from a Walmart executive earlier this year. “And where is all their money?”
What do you think about this? We know Henry Ford I was successful in large part because he paid all of his employees enough to buy the cars they were making at Ford Motor Company.
- ‘Checkbook IRAs’ let you invest retirement funds in real estate – latimes.com
Not many people even know you can invest your retirement savings in real estate. But under Section 408 of the Internal Revenue Code, as long as you don’t benefit directly, you are allowed to put some or even all the funds you set aside in a tax-sheltered IRA into real estate.
They’re called self-directed IRAs because you can move your funds around. But until a 1996 court case, every step you wanted to make had to be carried out through a costly custodian. You could not take direct control. Every time you wanted to mow the grass or pay the bills, you had to pay a trustee to do it.
In the 1996 case of Swanson vs. Commissioner, the tax court gave its blessing to a new type of self-directed IRA structure — the checkbook IRA — that is much simpler than investing through a regular custodial account.
Check out the article for quite a bit of additional info to consider.