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- Odds that Fed will delay tapering rise as US economy stumbles /Euromoney magazine
This is more in line with our thinking but not as soon as this month, September.
"We've got a strange situation where the market is discounting tapering, but the evidence doesn't seem to support a move now so they could deliver a token amount, reducing purchases by say $5 billion instead of $10 billion," says Frances Hudson, global thematic strategist at Standard Life.
- JLL: Top 5 Tech Tenants in San Francisco 2010 and 2013 | The Registry
Read the source article ... https://news.theregistrysf.com/jll-top-5 -tech-tenants-in-san-francisco-2010-and- 2013/
- JLL: Tenant Demand Shows Sings of Diversity in San Francisco | The Registry
Even though technology is still the main driver of demand for office space in San Francisco, the exponential growth witnessed in the last year has begun to decelerate. At the same time, more traditional industries are beginning to recover and are showing signs of momentum amidst substantial cutbacks and downsizing in recent years.
Read the source article ... https://news.theregistrysf.com/jll-tenan t-demand-shows-sings-of-diversity-in-san -francisco/
- LLoyds boss: We're happy to offer 95% mortgages again... there won't be a housing bubble: | Mail Online
A controversial return to 95 per cent mortgages – levels last seen before the credit crunch – has been defended by Lloyds Banking Group chief Antonio Horta-Osorio.
Amid fears that heady levels of borrowing might be fuelling a new housing bubble, he said: 'We are comfortable – depending on the customer. We look at customers not at products.'
Lloyds is regarded as the most influential lender as it supplies a quarter of all mortgages in the UK.
The bank has a total exposure of £322billion, meaning that it could face a big hit if Horta-Osorio is wrong about the risk.
The bank, which is 38 per cent owned by the Government after being bailed out by the taxpayer at the start of the financial crisis in 2008, is also a strong supporter of the Help to Buy scheme. This is aimed at first-time buyers, but is available to anyone buying a property worth up to £600,000.
Horta-Osorio shrugged off suggestions that Help to Buy, which allows purchasers to put down a deposit of just 5 per cent of a property's value while the Government guarantees 20 per cent, was inflating another house price bubble, similar to the one before house prices collapsed in 2008.
Horta-Osorio said: 'The fact that it's a temporary scheme will allow it to be withdrawn and not allow a housing bubble. Nobody wants a housing bubble, but it's premature [to say we have got one] when house prices are below the level they were at in 2006.'
We can't overstate that we don't have to reach 2006 highly inflated housing prices before we are in a bubble here or in the UK.
- PulteGroup, Inc.(NYSE:PHM), Lennar Corporation(NYSE:LEN), Toll Brothers Inc(NYSE:TOL): A Dangerous Double Dip Looms In Real Estate | ETF DAILY NEWS
This is an extensive excerpt because if Shah Gilani has it right, it will be a huge problem for the general economy. We tend to think at this point, the Fed will do everything it can to avoid a repeat; but, one never knows. The Fed would be risking losing its mandate if it were to sit on its hands while Gilani's picture unfolds.
Shah Gilani: Everyone knows the U.S. housing "recovery" has been resurrected on slippery ground. But now that we're finally about to slip – big time – no one sees it coming…
Then again, how could they?
The numbers are incredibly misleading…
According to the Commerce Department, new residential home sales in July fell a whopping 13.4% from their June sales pace. And sales in April, May, and June were all revised significantly lower.
Yet according to the National Association of Realtors, existing home sales (completed transactions that include single-family homes, townhomes, condominiums, and co-ops) increased 6.5%… to a seasonally adjusted annual rate of 5.39 million in July, from a downwardly revised 5.06 million in June.
On the surface, the divergence is confusing. But not when you look below the surface, where the real money gets made.
As you'll see (before anyone else), the housing "recovery" is just one giant "short squeeze."
Housing has risen too far too fast off its floor given trends in economic growth, employment, interest rates, lending standards, mortgage money availability, and consumer confidence.
We're already seeing a back-up in pending sale contracts, refinancing, and new money purchase loans on account of the tick up in rates. Which, on a historic basis, are still very low. If rates continue to climb on the long end of the yield curve, buyers will balk. If rates tick up on the short end of the yield curve, banks will balk at lending. In other words, if th e Fed does not continue to engineer a steep yield curve, then purchase money will become tighter and tighter.
There can't be any meaningful recovery in housing beyond the bounce we've seen unless lenders loosen underwriting standards and make loans plentiful.
Investors have bid up home prices off the floor so as to make rentals more expensive and force individual homebuyers to pay full price for whatever inventory is on the market.
Once the trade is fully priced and at new highs, on a relative time and appreciation basis, the buying power represented by the bottom-feeding institutional money will dry up, and only homebuyers in a solidly growing economy with greater employment opportunities and bankable confidence will be left to take prices higher and provide forward momentum for the recovery in housing.
Read the source article ... https://etfdailynews.com/2013/09/06/a-da ngerous-double-dip-looms-in-real-estate/
- Learning from 1997 Tax Hike - Japan Real Time - WSJ
Japan's revised April-June gross domestic product figures may have pointed to a strong improvement in the economy, but does it make sense to let this data set determine a contentious tax hike many months away from now?
As debate heats up over whether to move ahead with a plan to raise the 5% sales tax to 8% next April, some economists are questioning the government's focus on the revised GDP data in making the key decision.
"This makes little sense," said Toshihiro Nagahama, chief economist at Dai-ichi Life Research Institute. "We must remember what happened in April-June 1996, ahead of the consumption tax hike in April 1997," he said, referring to the last time the tax rate was raised, from 3% to the current 5%.
As our loyal readers have probably already concluded, we agree with Toshihiro Nagahama.
Read the source article ... https://blogs.wsj.com/japanrealtime/2013 /09/09/learning-from-1997-tax-hike/
- It's no longer a house seller's market » OC Housing News
Based on what I am seeing today, I believe the seller's market is over (at least for now). Perhaps interest rates will go down and reignite buyers, but I rather doubt it (See: Housing affordability set to plummet as interest rates spike again). It's possible that the federal reserve's announcement of the taper pulled supply forward, and in coming months, the lack of sellers will cause bonds to rally and interest rates to fall. In my opinion, tt seems more likely that the removal of $85 billion in monthly demand will cause bond prices to fall even more.
Well, just how quickly and insensitively will the Fed stop its $85 billion in buying? Will the Fed continue tapering even in the face of a crash? Ben Bernanke won't be there, but it would be amazingly bad for the Fed to forget that Ben said that the Fed would even reverse the tapering if needs be.
That said, there's plenty in the linked article worth pondering.
Read the source article ... https://ochousingnews.com/news/its-no-lo nger-a-house-sellers-market
- Why Millennials Aren't Rushing Into Homeownership | AOL Real Estate
The housing recovery may be well underway, but this recovery is virtually millennial-free. In fact, according to Census Bureau data, from 2006-2011, Americans between the ages of 25 and 34 experienced the largest decline in homeownership rates in the country.
We all know the obvious and primary factors behind this decline. These so-called millennials -- mostly the children of baby boomers -- are saddled with student loan debt. The Consumer Financial Protection Bureau estimates that of the roughly $1.4 trillion that Americans owe on school loans, 67 percent of it is owed by people younger than 40. They've also got a few thousand dollars in credit card debt, and many are either unemployed or underemployed. With home values skyrocketing and mortgage rates hovering near a two-year high and still climbing, median wages haven't kept pace and now millennials can no longer afford homeownership.
But here are some of the more personal reasons these traditional first-time buyers -- America's largest generation -- are not getting in:...
Read the source article ... https://realestate.aol.com/blog/2013/09/ 09/why-millennials-low-homeownership-rat e/
- Fannie, Freddie making billions—why shut them down?
"The construct of a government-guaranteed, mortgage-backed security is absolutely going to be needed," said David Stevens, CEO of the Mortgage Bankers Association. "You can't have a functioning housing finance system where private capital just leaves it in the next recession. You need to have constant liquidity provided to the U.S. system, and that comes from the guaranteed mortgage-backed security."
Confidence is key going forward, and investors are unlikely to pour money back into the mortgage market without a guarantee that in another catastrophic crash there won't be some government backstop. One of the leading bipartisan proposals in Congress, introduced by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., does create an investor and borrower-funded backstop. It will make loans slightly more costly, but the government guarantee on mortgage-backed securities would be there.
If they fix what isn't broken and make loans more costly, it will be more profitable for the larger private mortgage bankers but also residential landlords. We are told, however, that it will hurt mortgage brokers and smaller mortgage bankers.
Read the source article ... https://www.cnbc.com/id/101018586
- Blame Game Smothers Solution For Fannie Mae And Freddie Mac - Forbes
Interesting commentary on the heels of our last link:
Erasing Fannie Mae and Freddie Mac from the landscape creates a high profile scapegoat, and a titanic void eagerly filled by private sector financial titans with private sector financial interests. This is how our free market system works, it is efficient and the balance of interests will tip away from the quasi-government Fannie Mae and Freddie Mac mission statements to what is in the best interests of the stockholders. The federal government may be tossing the stewardship of the housing and mortgage finance markets like a hot potato, less interested in a best solution than it is in political chess.