News Alerts, Aug. 22, 2013: Real Estate + Linking doesn't constitute endorsement. Enjoy (share on social networks if you appreciate PropertyPak's efforts):
- Housing prices rose in 69 out of 70 of China's biggest cities. That's pretty scary - Quartz
... dilemma the government faces when it comes to real estate prices is intensifying.
First, there's the paradox of why, despite widespread dissatisfaction with rising prices, people keep shelling out. Due to the closed capital system, Chinese people who lack either strong government connections or an export/import business—i.e. most people—aren't allowed to invest outside the country.
Read the source article ... https://qz.com/116538/housing-prices-ros e-in-69-out-of-70-of-chinas-biggest-citi es-thats-pretty-scary/
End Austerity Now by Mark Blyth - Project Syndicate
Do you think he's sufficiently summed it up?
...every country that has implemented an austerity program without imposing losses on private creditors has more debt now than when it started. For example, according to official estimates, Spain's public debt, which amounted to only about 36% of GDP when the crisis began, has almost tripled – and the actual figure may be much higher. More telling, the countries that cut expenditure the most experienced the largest bond-yield spikes and the most significant debt growth.
The explanation for this is simple. When a country gives up its monetary sovereignty, its banks are effectively borrowing in a foreign currency, making them exceptionally vulnerable to liquidity shocks, like that which sparked turmoil in Europe's banking system in 2010-2011. The government, unable to print money to bail out the banks or increase export competitiveness through currency devaluation, is left with only two options: default or deflation (austerity).
Austerity's underlying logic is that budget cuts, by reducing the debt burden and restoring confidence, ultimately enhance stability and support growth. But, when countries pursue austerity simultaneously with their main trading partners, overall demand plummets, causing all of their economies to contract and, in turn, increasing their debt/GDP ratios.
New York Prime Retail Rents Second to Hong Kong | Commercial Observer
Despite asking rents on Fifth Avenue topping $3,000 per square foot, New York prime retail space still trails the Hong Kong market, where asking rents are $4,328, according to CBRE's quarterly ranking of the world's top 10 retail markets.
"Global retailers continue to desire premier retail locations in gateway cities because of the global shoppers those corridors attract and the value delivered for brand visibility," said Anthony Buono, executive managing director of Americas Retail Services at CBRE, in a statement.
New York outpaced third-placed Paris....
Read the source article ... https://commercialobserver.com/2013/08/n ew-york-prime-retail-rents-second-to-hon g-kong/
Natural hazards increase propensity of mortgage default | 2013-08-15 | HousingWire
Logical from CoreLogic:
...little is known about the level to which mortgage portfolios are exposed to natural hazard risk, which includes tornados, hurricanes and straight-line winds, hail, wild fires, earthquakes, storm-surge flooding, inland flooding and sink holes.
In 2010, the federal government declared a record number of 81 natural disasters during the year, while in 2011, a new record was set for disaster declarations with twelve separate billion-dollar weather/climate disasters with aggregate damage totaling approximately $52 billion, according to a report on natural disasters from Trulia.... ... "One risk that we have historically presumed is covered by requiring insurance is the risk of mortgage default due to natural disaster," the CoreLogic report said. "Our research demonstrates that borrowers, after controlling for their propensity to default based on traditional mortgage credit characteristics, default at a higher rate the higher the propensity of natural disaster is at the property level." [— CoreLogic]
Read the source article ... https://www.housingwire.com/articles/262 00-natural-hazards-increase-propensity-o f-mortgage-default
Housing and rising interest rates - Bankrate, Inc.
Economist Robert Brusca notes that there's been a significant recovery from the depths of the housing market collapse. "Both new and existing home sales have been rising strongly in this recovery after a slow start," Brusca says. "Existing sales are up some 47 percent from their low point, while new home sales are up some 84 percent from their low. From those reference points, median existing home prices have risen 17 percent, with new home prices up 13 percent."
At the same time, he's sees some signs that are worrisome. "For low-priced houses ($100,000 and lower), existing home prices are still lower year-over-year by nearly double digits. New homebuilding is cherry-picking the hottest regions and is not representative of the (U.S.) housing market." Homebuilder stocks have recently been declining amid lower expectations.
As for helping to spread the wealth, so to speak, to the broader economy, Brusca says, "It is not surprising that sales of items that relate to homebuying -- like appliances, furniture and building materials -- are lagging."
Read the source article ... https://www.bankrate.com/financing/econo mics/housing-and-rising-interest-rates/
Housing Starts Rise 5.9% as Multifamily Construction Rebounds
Builder Confidence Rises for Fourth Consecutive Month
"Today's report is in line with our forecast for continued, gradual strengthening of housing starts and permit activity through the rest of the year," said NAHB [National Association of Home Builders] Chief Economist David Crowe. "The double-digit bounce-back on the multifamily side was in keeping with typical month-to-month volatility in that sector," he noted, "while the sideways movement in single-family was a result of unusually wet weather in the South and West."
Will Rising Rates Kill the Stock Market? | PRAGMATIC CAPITALISM
It will take increasing rates of economic growth, increases in wage growth and full-time employment, rising monetary velocity and upwardly trending inflation to change the long term trend of interest rates higher. Unfortunately, at the moment, the economic environment that currently exists is not supportive of such factors.
Read the source article ... https://pragcap.com/will-rising-rates-ki ll-the-stock-market
Home Depot reaps benefits from U.S. housing rebound | Reuters
In recent quarters, housing has rebounded in those markets and other states where Home Depot has a heavy presence, such as Arizona and Nevada. In May, the company said its sales to contractors and professional customers increased faster than those to individual homeowners and other shoppers for the first time since 2008.
"While we see continued near-term margin improvement on strong cost control, we think rising interest rates threaten housing turnover, limiting sales growth," said S&P Capital IQ analyst Michael Souers, who believes Home Depot shares are expensive at current levels.
Read the source article ... https://www.reuters.com/article/2013/08/ 20/us-homedepot-results-idUSBRE97J0A0201 30820
Uncertainty binds US mortgage finance system | 2013-08-19 | HousingWire
"While policymakers and recent legislative proposals have acknowledged that the current housing market recovery is not sustainable without the return of private capital, many housing policy initiatives to date have been fragmented and in some instances, effectively discourage private capital from the sector," explained analysts for BlackRock.... ... However, the environment of GSE reform is complicated by positive financial information from the housing agencies due to the enterprises' profitability, dominant market share and increased guarantee fees.
Don't those two statements contradict each other? If Fannie & Freddie are profitable, why is "the current housing market recovery...not sustainable without the return of private capital"?
...there is a consensus that any approach to reform must attract more private capital....
Fannie & Freddie securitize private capital now, don't they? There's been a strong debate about whether ending F&F would cause housing to become that much more expensive and slow the recovery. That doesn't sound like consensus to us. What are we missing? What are your thoughts? You may add them in the comment section below.
Also, even though landlords (our clients) might benefit in some ways, they'd probably be worse off overall due to a generally weaker economy than would otherwise be the case.
Read the source article ... https://www.housingwire.com/articles/262 85-uncertainty-binds-us-mortgage-finance -system
Financial Recovery To Drive Office Demand? - Commentary Article - GlobeSt.com
So far, the office market recovery has been held back by a lack of demand, as the supply pipeline shuttered following the recession and fundamentals remain near their trough and unsupportive of new construction. According to REIS, office vacancies remain elevated at 17% inhibiting rent growth, and the holy grail to getting growth in these fundamentals is absorption removing the remaining excess supply. As vacancies fall, rents will be able to grow more rapidly. This has been tough given the malaise in large office space using industries, resulting in a sector with fundamentals stagnant near their trough.
However, with the stock market roaring to new all-time highs, banks posting record profits and the initial recovery in the housing market, it appears financial firms are once again hiring.
Read the source article ... https://www.globest.com/commentary/offic e/Financial-Recovery-To-Drive-Office-Dem and-336726.html
Sober Look: Are mortgage rates impacting construction? A couple of signals from the markets
Some people are good at telling stories with charts and graphs. Here's an example. It's very short and to the point. Check it out.
Read the source article ... https://soberlook.com/2013/08/are-mortga ge-rates-impacting.html
Piggyback mortgages mount a comeback - Houston Chronicle
Piggyback loans are making a slow comeback as home values start to pick up.
These loans mean a borrower takes out two mortgages at once. The second mortgage is in the form of a home equity loan or line of credit.
Piggybacks lost favor after the housing downturn. Now they are returning. The American Bankers Association reports in its 2013 annual real estate lending survey that piggyback mortgages accounted for 3.8 percent of the loans originated by surveyed bankers in 2012, compared to 1.7 percent of the loans for 2010.
Why borrowers get piggybacks.... to avoid paying for mortgage insurance but don't have enough money for a 20 percent down payment. ... To avoid going over the conforming loan [jumbo loan] limit.
Read the source article ... https://www.chron.com/homes/article/Pigg yback-mortgages-mount-a-comeback-4737922 .php