News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

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  1. China May Cut 2014 Growth Target to 7%, State Economist Fan Says – Bloomberg News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    China’s government may cut the country’s annual growth target to 7 percent next year, although the actual pace of expansion will be higher, according to Fan Jianping, chief economist at a state research institute.

    The drop would be in line with the goal set in the country’s 2011-2015 five-year plan for annual average expansion of 7 percent, Fan, who works at the State Information Center under the National Development and Reform Commission, said in an interview in Shanghai on Sept. 7.

    China’s economy is set to expand 7.5 percent this year, matching the government’s target set in March and the weakest pace in 23 years, amid curbs on credit expansion, property development and overcapacity. President Xi Jinping said last week the government chose to bring down the growth rate to solve “fundamental problems” hindering long-run development

    “It’s hard to find good reasons to be optimistic” about a recovery in China’s growth, Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, said in a Sept. 6 interview. “The economy has been pretty much supported by investment, especially property and infrastructure, but it’s hard to see how the momentum can continue.”

    Zhang, who sees “moderate upside risks” to his third-quarter growth estimate of 7.4 percent after better-than-expected economic data, said he’s maintaining his 2014 forecast of 6.9 percent as the current recovery is unsustainable.

    The biggest question is corruption. How deep is it? How much is negative info suppressed? How much are the numbers fabricated?

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  2. The GSEs Are Being (Very Slowly) Phased Out; Perhaps We Are Seeing The Consequences – Forbes News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    … while PLS backed loans [private-label-securitized] come with low prices to consumers, they do not provide access to credit to many credit-worthy borrowers. That is what might happen if we move to a purely private market. The interest rates on loans that are originated may be no higher, but the availability of loans may be a lot lower.

    We agree.

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  3. Sober Look: Evidence mounts that China had escaped the worst of emerging markets rout News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    The profitability of the banking system has been declining for some time (see Twitter post), but so far we haven’t seen any failures as some had predicted. That doesn’t mean such an event is off the table – bad assets can be hidden for a long time. But if it were to happen, the government may not let such news see the light of day.

    That’s a problem going forward.

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  4. India’s Middle Class Hit as Rupee Plunge Pushes Up Prices – Bloomberg News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    Mumbai taxi driver Saiyad Ahmed Ali has cut back on fruit and fish, from about twice weekly to once a month these days as prices surge. He’ll tell you the culprit: India’s weakening currency.

    “The rupee’s value has been falling, gas is getting more expensive and fewer people want to take cabs,” said Ali, who has seen his daily income fall by about a third, to less than 400 rupees ($6.05) after the costs of running his taxi. “Life here in the big city has become more difficult.”

    A 17 percent plunge in the rupee this year has driven up the cost of imports such as petroleum and chemicals used in packaging. As a result, companies have raised prices for consumer staples like cooking oil and soap to compensate for imported raw-material and transport costs.

    India needs to go back to the drawing table.

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  5. Why Keynes wouldn’t have too rosy a view of our economic future News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    We’re all Old Keynesians or New Keynesians or not now.

    The economy is currently sick, as yet another month of weak job growth shows. But is it sick in a “walk it off” kind of way, where, even though it looks like a commercial for flu medication, it’ll eventually get better on its own, or is it sick in a pneumonia kind of way and will just permanently stay that way?

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  6. Negative Equity Rate Falls for 5th Straight Quarter in Q2 | Zillow Real Estate Research News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    We appreciate Zillow’s no-fluff approach in economic analysis. Recommended reading:

    Despite these high rates of appreciation, negative equity is still very high and will remain high as deeply underwater homeowners are slowly being lifted toward positive equity. This is a process that will take several years – especially in the hardest hit markets – to work off the high levels of negative equity.

    Figure 3 shows the loan-to-value (LTV) distribution for homeowners with a mortgage in the nation in 2013 Q2 vs. 2012 Q2. Even though many homeowners are still underwater and haven’t crossed the 100% LTV threshold to enter into positive equity, they are moving in the right direction. The good news is that with these high rates of appreciation negative equity has been reduced at a fast pace in the near-term (this will change as home value appreciation moderates later on this year and into the next, as the current rates are not sustainable).


    Over the past year we have clearly seen the impact of negative equity on the market. We have described how negative equity limits the available for-sale inventory in the marketplace, which in turn has produced extreme rates of home value appreciation. Negative equity will continue to impact the real estate market, especially as mortgage rates rise and home value appreciation tempers. There are already cities, such as San Francisco, Denver, Boston and Washington, D.C., which have surpassed their housing bubble home value peaks and homes are now more expensive than they have ever been in these markets.

    We are already seeing slowing demand for homes, and this will lead, in some markets, to stagnant home values or even home value depreciation. Once that occurs, negative equity will be reduced at a much slower pace and might even increase again. We ex pect these dynamics to unfold two to three years from now once mortgage rates are again closer to more normal levels. We expect the 30-year fixed mortgage rate to reach 5 percent by the middle of 2014. In the short term, home values are up 6% on a year-over-year basis in July 2013, and given our forecast of an additional 4.8% home value appreciation over the next year (July 2013 to July 2014), we expect that negative equity rates will continue to decrease in the next year to a rate of, at most, 20.9% by the first quarter of 2014.

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  7. Are Multifamily Rents Reaching Their Peak? | Multifamily content from National Real Estate Investor News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    All other things being equal, you aren’t going to squeeze blood from a turnip or more dollars from tenants who’ve already cut everything to the bone. (Registration required)

    The next time your property management software recommends raising the rent on multifamily lease renewals, you might want to think twice.

    “Landlords may be reaching the limits of what they can charge for marginal rent increases,” says Victor Calanog, vice president of research and economics for Reis.

    Your computer system may automatically push rents higher when your apartments fill up. But residents will have to find that extra money somewhere—or they will have to move out. In markets across the country, rents have been rising faster than incomes.

    The combined cost of housing and transportation in the nation’s largest 25 metro areas have swelled by 44 percent since 2000 while household incomes have risen only 25 percent. That means that for every dollar household incomes have gone up, housing and transportation costs have risen by about $1.75, according to the Center for Housing Policy—the research affiliate of the National Housing Conference—and the Center for Neighborhood Technology.

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  8. Real Estate Red Alert: The Flippers Are Back | The Fiscal Times News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    As housing analysts start to worry about the sustainability of the recent run-up in the real estate market, a troubling trend has returned, harking back to the days of the housing bubble: house flipping.

    In the first half of 2013, home flipping – buying and selling a home (in the hopes of turning a profit) inside of six months – increased 19 percent over the same period last year, and it increased 74 percent over the first half of 2011, according to a report by RealtyTrac.

    Is flipping by those who really do add value all that bad?

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  9. The First Anniversary of the Second U.S. Housing Bubble – Political Calculations – Townhall Finance Conservative Columnists and Financial Commentary – Page full News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    It’s the wages.

    Since 1967, median new home sale prices in the U.S. have typically increased by anywhere from $3.37 to $4.09 for every $1 increase in median household income in the absence of any periods of bubble inflation or deflation in U.S. housing markets.

    At its first anniversary, median new home sale prices in the second U.S. housing bubble are inflating at a rate that’s over six to seven times greater than those typical levels!

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  10. FHA Loans Are Assumable, And Other FHA Loan Benefits News Alerts, Sept. 16, 2013, Morning Edition, #RealEstate +

    The FHA Insures All Property Types

    FHA home buyers are able to purchase any home type in any U.S. neighborhood — whether in the 50 United States, the District of Columbia, or any U.S. territory. The FHA will insure single-family detached homes, 2-unit homes, 3-unit homes, 4-unit homes, condominiums, mobile homes and manufactured homes.

    The FHA Allows Larger Loan Sizes

    A “loan limit” is the maximum allowable loan size for an area and, as another FHA benefit, FHA loan limits are much higher than conventional loan limits in many parts of the country. In Orange County, California, for example, or New York City, the FHA will insure up to $729,750. By contrast, conventional loans stop at $625,500. For 2-unit, 3-unit and 4-unit homes, FHA loan limits are even higher — ranging up to $1,403,400.

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