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Weekly News (September 29, 2021)

This week’s Interest Rate (39th Week)

(By Fairway Home Loan )

   30 yr fx (%)  15 yr fx (%) FHA (%) 10 yr Tr Y (%)
A year ago      2.875       2.490     2.625          0.664
A month ago      2.750       2.125     2.375          1.289
Last week      2.800       2.125     2.490          1.314
This week      2.999       2.250     2.625          1.524

 

Prime Rate:3.0% / Ref IR: 0.00- 0.25% 

  • 3% Down payment for 1st home buyer is available.
  • 5% Down payment 2-4 units FHA program available
  • 15% Down payment 2 families -conventional program available.
  • Potential home buyer — Have a pre-approval first before the shop.  Now we have 48hour underwriting turn-around times for regular loans.
  • 2021 Conventional loan limit:  Conforming SFR : $548,250/ Conforming high balance: $882,375/ Confirming 2 Family: $702,000/ Confirming High Balance: $1,053,000

 

No massive short sale or foreclosure will be anticipated after forbearance ends

(Korea Times  9/25)

  • Even though the mortgage forbearance program ends at the end of July 2021, it is not anticipated to have massive short sales or foreclosures like in the financial crisis.  According to CNBC, the maximum benefits of forbearance programs of 1.6M people will be ended at the end of September. According to Blacknight, people with delayed mortgage payment reduced 5% from the last week.
  • The total of 1.618M which is 3.1% of the total mortgage program are under the benefits of forbearance program, which was 5M people in May 2020.
  • 98% of people under the benefits of forbearance program have about 10% of equity and 93% of people have more than 10% equity because of increased home value.
  • If the benefits of forbearance program end at the end of September, some foreclosures will be increased for the next 3 months, but no massive foreclosed inventory will be added to the market.
  • Even more Biden Admin said that they will initiate the plan to reduce at most 25% of monthly mortgage payment for those who are behind more than 90 days and those who are under mortgage forbearance program.

 

Investing in self-storage building is more lucrative than investing in apartments

(Korea Time  9/28)

  • There are about 30,000 operators/owners of self-storage for 55,000 self-storage buildings in U.S. Self-storage business has been grown steadily with 3.5% annual growth rate for last 30 years. In the beginning of the pandemic, the sector has been hit hard, but soon after it has been recovered quickly ironically with the same reason of the pandemic. Work from home style created high demand for self-storage because they needed more space at home.
  • The biggest advantage of this self-storage business is that the operating expenses is much lower than other hotels or residential rentals. On-line operation makes even less operating expenses than before and there is no eviction control by the government agencies.
  • “Extra Space”, a REIT company in NY Stock exchange is showing 26% stock price increase in 3 months while hotel and resort REITs have shown 7% decrease. “Public Storage” stock price increased to $330.76 from $230.93 at the end of the last year.

 

Next year residential market will be still seller’s market

(Korea Times  9/28 )

  • Fannie Mae forecasted that high home prices, delayed home construction, and low inventory will be continued next year, and home sales this year will increase 3.3% from the last year which is higher than the forecasted 3.1%.
  • Housing affordability is challenged due to the sharply increased construction cost and consumer demand. Also the danger to forecasting residential market is the increased mortgage interest rates due to the rising inflation.

 

Housing-Affordability Problems Mount

(WSJ 9/28 )

  • Pandemic-driven rise in home values sparks tough balancing act for policy makers globally. The record-setting rise in home values during the pandemic is triggering fresh debates about housing affordability world-wide, as policy makers search for ways to rein in price appreciation without driving prices sharply lower or derailing the global economic recovery.
  • Sydney house prices leapt by nearly $870 a day in the 2nd Qt of the year, and in the U.K., first-time buyers are paying on average 32% more than 12 months ago. In Berlin, voters on Sunday backed a nonbinding referendum to nationalize large real estate groups with more than 3000 apartments. Recent events in China are a reminder of how tricky it can be to try to tame the market. Chinese leaders, worried that rising housing costs could trigger unrest and add risks to the financial system, have moved to curtail price increases and rein in borrowing. Now China Evergrande Group, a leading developer, is on the blink of collapse, and home sales are weakening, triggering fears of wider economic damage.
  • Some economists think it is best to leave the market alone and that prices will level out. There are signs this may be happening in the U.S., where existing-home sales posted a 2% decline in August from July, in part because high prices are squeezing out some buyers. Still, prices aren’t expected to fall significantly.

 

Growth in Home Prices Hits a Record

(WSJ   9/29)

  • Home-price growth climbed to a new record in July as buyers continued to compete fiercely amid a shortage of homes for sale, but there are signs the market frenzy might be starting to ease.
  • The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major U.S. metropolitan areas, rose 19.7% in the year that ended in July, up from an 18.7% annual rate the prior month. July marked the highest annual rate of price growth since the index began in 1987.
  • In a separate report Tuesday, the Conference Board said consumer confidence fell in September for the third straight month, as the spread of Covid-19 and inflation concerns weighed on households. The consumer confidence index fell to 109.3 in September from a revised 115.2 in August, according to the Conference Board.
  • A separate measure home-price growth by the Federal Housing Finance Agency(FHFA) also released Tuesday found a 19.2% increase in home prices in July from a year earlier.

 

Companies Put Cash to Work By Buying Properties

(WSJ 9/29)

  • The biggest U.S. companies are sitting on record piles of cash. They are getting paid next to nothing for holding it, and they are running out of ways to spend it. So they are buying a lot of commercial real estate.
  • Google’s announcement last week that it would purchase a Manhattan office building for $2.1B is the latest in a string of blockbuster corporate real-estate deals since the start of the pandemic. com Inc. last year paid $978M for the former Lord & Taylor department store in Manhattan.  Facebook Inc. bought an office campus in Bellevue, Wash., for $368M.
  • Overall, publicly traded U.S. companies own land and buildings valued $1.64T, according to S&P Global Market Intelligence. That is up 38% from 10 years ago, and the highest for at least the past 10 years.
  • Retailers such as Walmart Inc. and restaurant chains such as McDonald’s Corp. have long been major property owners of their own stores. Now big technology companies are joining them.
  • Office prices, meanwhile, have fallen in Manhattan, San Francisco, Chicago and other big cities during the pandemic, making investing in this real estate cheaper than it was 18 months ago, investors say.

 

Company Symbolizing China’s Rise Faces a Fall

(NYT   9/29)

  • Xu Jiayan was the China’s richest man, a symbol of the country’s economic rise who helped transform poverty-stricken villages into urbanized metropolises for the fledgling middle class. As his company, China Evergrande Group, became one of the country’s biggest property developers, he amassed the trappings of the elite, with trips to Paris to taste rare French wines, a million-dollar yacht, private jets and access to some of most powerful people in Beijing. And he thanked the Chinese Communist Party for all this success in his speech in 2018.
  • Now China is threatening to take all away. The debt that powered the country’s breakneck growth for decades is now jeopardizing the economy. – and the government is changing the rules. Beijing has signaled the strategy of borrowing to fuel business expansion that turned Mr. Xu and his company into a real estate powerhouse, pushing Evergrande to the precipice.
  • Without intervention, China’s economy and society will be set on the crater of the volcano where all may be ignited any time, Li Guangman, a retired newspaper editor wrote in an essay.

 

Others/Tech News: Amazon’s new robot, “Astro” can check your home

  • can check if you left the stove on while you are out.
  • Astro can hear, see and follow you around home.
  • $1000, 17 inch tall robot will be available later this year with the limited quantity.
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Stephen Lee

He has been in Real Estate industry in about 20 years and has been Broker of Record for 9 years. His experience includes residential, commercial, and property management. Prior to involving with Real Estate business, he has been involved in the digital communication equipment industry utilizing his engineering background and education, including running own company. He has established C Land Realty in 2011 which has grown to staffing over 100 Real Estate agents and the annual transaction amount of over $110,000,000 today.

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